Why not minimize the effort your organization puts into non-revenue generating activities. Specifically I’m talking about your 401k. With technology the way it is today, you can automate your 401k, integrate it with your payroll services so that your organization has almost no administrative burden. The Time and effort that used to go into administering your 401k can now be focused on revenue generating activities.
Here at The 401k Source, we believe a 401k should be easy to administer, inexpensive to operate, utilize high-quality market tracking investment options, and have a knowledgeable human that can help guide your employees into making wise decisions.
Let’s face it: there are several issues that can get in the way of employee performance. The most commonly referenced is health issues. When employees become sick or unhealthy, they are less productive and end up causing a burden on the efficient functioning of the company.
A less commonly thought of restriction to employee performance is financial problems. In this case, it may even be more common than health problems. Many people in today’s society are facing financial difficulties. They spend a significant amount of their time thinking about their problems and trying to solve them. Which not only uses their mental energy in areas that aren’t conducive to your goals, but it also takes away time and effort from the job for which you are paying them.
It’s my contention that when The 401k Source lowers the costs, automates your 401k, yours and ours time, effort and energy can be used to coach and educate your employees on how to think about the financial decisions they make. When coached, employees can make more educated and more productive decisions about their finances.
After 25 years in the industry of working with employers and employees, I’ve had a lot of opportunity to sit down and do one-on-one individual meetings. During this time, I have found that a significant number of people:
- Aren’t saving enough money
- Are facing financial hardships, making their personal and professional lives more difficult
By using technology to automate the retirement plan it gives us more time to contribute efforts to solving employee problems. Coaching and making better decisions is one thing that humans do better than a computer or an algorithm.
Over the years, I have seen lots of things to go right with 401(k)s and also I see lots of things that can go wrong with a 401(k). Some of the things where companies run into trouble is getting their contributions into the employee accounts in a timely manner. Fortunately, this has become less common than it used to be, but it still continues to be an issue.
If we integrate the 401(k) with your payroll providing system, we can automate this process, therefore freeing up your payroll personnel from the time and duty of this task and putting that on a third-party provider that specializes in this area. Not only will it save your company time and money to do it this way, but arguably, you also outsource the liability. So if there is a mistake, it’s not on you and your company. It’s on the professional firm that was engaged in order to manage the service. You still maintain the liability of choosing that provider, but the work they do is now their liability. Because the payroll integration is a specialized job, these companies are very, very good at integrating with your payroll and making it run smoothly. Say “bye bye” to manual tasks.
Every payroll, every pay period, files are automatically uploaded into the record keeping system. Any newly eligible employees to the 401(k) plan will be entered and deferral changes into the payroll system will be automatically handled. That just makes sense. Let’s face it, people are prone to “human error” and by automating these systems, you eliminate simple, yet common errors, like typos and transposed digits.
One thing that employers dislike is having to manually change employee deferrals every pay period. It sometimes causes HR stress and concern that they may have missed something along the way, after all the IRS says, “An employer’s failure to execute an employee’s election to defer amounts to 401(k) is a relatively common error” and penalties are stiff. So, again, I think we should try to automate these processes and outsource the duties and liabilities to a firm that specializes in this area.
Another area that employers find troublesome is employee onboarding communications. It’s our belief that your company doesn’t need to be sending onboarding communications if you can outsource this duty for less to a specialist, it makes good business sense.
How about employee eligibility tracking? If someone in your company is responsible for tracking hours worked to estimate employee eligibility, or imagine outsourcing this duty with payroll integration which automatically tracks your employees’ eligibility and notifies you and them when there’s a change.
Another service that we like to recommend is automatic enrollment. Automatic enrollment is proven to increase or improve employee outcomes. People have a tendency to procrastinate. They procrastinate contributing to the retirement plan. We can use this tendency to procrastinate to the employee’s benefit. If they procrastinate opting out of the plan, then they get money that they never would have contributed without automatic enrollment.
With payroll integration, automatic enrollment becomes easy because the system automatically tracks eligibility and enrolls the employee into the qualified default investment alternative, QDIA, when that employee becomes eligible. Another advantage is that if there’s an escalation, this part is automatically handled as well because when the eligibility or tenure of an employee is automatically tracked, then the payroll integration will automatically increase the withholding of employee contributions. This is something that your staff should not be doing. It ought to be turned over to a computer. In summary, there are several reasons that your company should consider automating 401(k) using payroll integration.
- It saves company time and money.
- It improves employee outcomes.
- It frees up your 401(k) provider to help your employees think better about their financial decisions.
- It lowers costs and improves performance.
It pretty much makes it a no-brainer, don’t you think?