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Streamlining 401(k) Administration in HCM

Posted by Amber Walton on Feb 3, 2021 11:42:23 AM

A 401(k) is a great benefit for employees and a massive headache for employers. Many companies waste time manually handling 401(k)s increasing compliance risks, but there’s a better way. Our HCM solution offers numerous features to make 401(k) administration easier, quicker, and more compliant. 

ELIGIBILITY

Our HCM platform has built in eligibility rules that allow you to dictate when employees become eligible for both their own contribution and the employer’s match. For example, if employees can contribute on day one of their employment but don’t receive the match until the first of the month following 90 days of employment, the system will maintain this effortlessly in the background, only allowing eligible employees to contribute or receive the match. 

You can also set eligibility based on length of service or hours worked, which is especially helpful if you have large part-time or seasonal populations. 

EMPLOYEES

Employee deferrals are set up as scheduled deductions, which can be either a percentage or a flat dollar amount for the same deduction code. These are easily created on the employee profile, through scheduled deduction maintenance, or imported directly from an Excel or CSV file into the system. Our payroll module allows you to create a specific earnings list for your 401(k) eligible earnings, so that the employee deferral rates are only applied to the eligible earnings. The system also automatically increases the contribution limit on an annual basis, preventing contribution overages that can cause compliance problems. To support the catch limits of the year, you can allow the annual limit to automatically increase for employees over the age of 50.

You also can provide guidance to your employees to get started with their 401(k) by assigning a task during employee onboarding, where you link to the external website and attach instructions for setting up their account and designating beneficiaries at the same time.

EMPLOYERS

Employer contributions and matches can be difficult, especially if you have a multi-level match calculation. Our HCM solution allows you to tier-level your match calculation, so you can spend less time on creating and maintaining complex calculations. Also, the system supports the ability for the match and match limits to calculate on multiple retirement plan types and deduction codes. For example, if you match on both your 401(k) and Roth 401(k) for one single limit, our system can finally do this easily and seamlessly.

For additional compliance support, the system also offers innate configuration for Safe Harbor with hard coded annual compensation limits and easily configured required employer contribution rates. 

RECORD KEEPERS

One of the most important steps for 401(k) administration is sending accurate data to your company's Record Keeper for every payroll for employee deferral contributions, loan repayments, and employer match contributions. Our system’s reporting tools allow you to easily create custom reports that can be exported and then uploaded to your Record Keeper’s site. 

However, our partner EverythingBenefits also provides 180 and 360 degree integrations with your 401(k) provider, allowing for a seamless connection between our HCM platform and your Record Keeper. With the 180 degree integration, our system can  automatically send those contributions directly to your 401(k) carrier as soon as you submit each payroll. For larger companies with a lot of changes, the 360 degree integration updates your HCM platform when an employee changes their deferral rate on the carrier site, so you get the updated rates back into your system quickly and with little effort on your part.

REPORTING

Because of its powerful reporting capabilities, our HCM platform can make 401(k) data easy to access and easy to understand. With the 401(k) eligible earnings list, you can pull reports that compare eligible earnings against gross earnings to provide data during audits or other information requests that clearly define what should be included for compliance. The system also allows you to save and schedule custom reports that you use year after year during your annual 401(k) audit and 5500 completion. 

Our HCM solution offers a myriad of benefits built to make your 401(k) experience easier. Stop wasting your time doing things the hard way and learn more about how our system works by visiting www.csphcm.com to schedule a demo. 

Topics: HCM, HRTech, HR, 401(k)

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