If your organization offers a non-profit retirement plan then your employees are equipped with a great way to save for retirement. But that can also mean some heavy duty administration for your organization.
For example, if you offer an ERISA plan you will need to file the information-heavy IRS Form 5500. And if there are more than 100 participants, the plan must provide audited financial statements. Even a non-ERISA plan needs a way to get employee contributions from payroll to the participant’s investment account. And while church plans may never be required to comply with ERISA rules, just a few oversights can mean private-sector plans must become ERISA compliant.
Sponsoring a 403(b) plan requires considerable oversight once the plan is up and running. For example, ERISA plans must comply with all communications requirements, including Department of Labor fee disclosures. A plan fiduciary is in charge of investment management, including the selection of investment options. If a plan provider is not serving as fiduciary in this regard, then you are the fiduciary.
In addition to investment providers, other vendors must be carefully selected and their fees evaluated. The Investment Policy Statement should be regularly reviewed and practices evaluated to determine if the statement is being followed. If loans are allowed, do they comply with stated policies? Are employees being alerted of the existence of the plan as required, and given the opportunity to change their deferrals?
One of the key responsibilities when offering a 403(b) plan is getting those defined contributions from payroll to participants’ investment accounts. This task is required to be done promptly. In addition, any employer contributions must be differentiated from employee contributions and records must be accurately maintained.
Allowing your payroll system to communicate with your 403(b) recordkeeping system is a great way to save time and reduce headaches. And, as a bonus, this automated process can cut down on manual mistakes. (If this process is not yet automated, the person compiling the ever-expanding spreadsheet will thank you once it is!) While payroll automation is critical to drastically simplifying your 403(b)’s day-to-day administration, there are many reasons NOT to hire your payroll provider as your retirement plan recordkeeper — namely higher fees and lower quality of service. The good news it that there are now ways to have your two systems talk to each other without tying yourself to a single payroll company.
At ForUsAll, our payroll integration means that your payroll data is the final authority when it comes to tracking eligibility, making contributions and confirming deferral rates. We’ve built software that pulls data from most cloud-based payroll providers and automatically syncs it with your recordkeeper of choice, so you can maintain bargaining power on fees, service, and more.
When the payroll and 403(b) recordkeeping systems don’t talk to each other, someone has to act as the intermediary. In the worst case scenario, that person is you. Just consider what happens when an employee wants to increase their 403(b) deferral rate – that employee probably sends an email to the person in charge of such changes (once the employee finds out who that person is), and that person makes the appropriate change in the payroll system so that the payroll company can log the new deferral rate.
And without payroll integration, each time payroll is run, a bevy of checks must be done to see if the 403(b) plan is affected. For example:
But with true payroll integration, you just run payroll and those 403(b) duties are handled.
That’s the big picture, and it’s a pretty attractive one to someone with spreadsheet fatigue. But here’s a bit more detail on how these benefits can make a difference to your staff and your plan:
Give your employees more than just a 401(k), join the movement.