Go beyond a basic 401(k)

Go beyond a basic 401(k)

Give your employees more than just a 401(k), join the movement.

5 min read

Cover Your Assets: 5 Tips for 401(k) Administration in 2020

Evan Ross
December 3, 2019
Cover Your Assets: 5 Tips for 401(k) Administration in 2020
Table of contents

I think you’ll agree with me when I say: 401(k) administration is a real headache.

It’s tedious. It’s complex. And it’s easy to mess up. And every time you make a mistake, even if it’s just a tiny one, it can add a lot of frustration and hassle during your year-end compliance work.

So we created this guide in the spirit of saving you time, hassle, and making your end-of-year compliance less of a burden. We’ll walk you through five 401(k) administration tips used by HR professionals at top companies to help them save time and keep their 401(k)s compliant – without wanting to pull their hair out.

Ready to get started? Let’s jump right in!

Tip #1 – Be Quick with Your Census

One of the most important deadlines at the start of 2020 has to do with the annual nondiscrimination testing that must be run for 2019. If your plan fails either its ACP or ADP testing, you have to make corrective distributions or QNECs by March 15th. If you don’t, the IRS requires you to file Form 5330 and pay them an excise tax of 10%. Though March 15th may seem like a ways away, things with 401(k) administration can oftentimes take a lot longer than you expect.

So our advice to you? Put together your year-end census file as soon as you run your final paycheck of the year. Since your TPA needs it to run the testing, getting your census together early in January should give you plenty of time to fix any issues and get your nondiscrimination testing squared away.

Tip #2 – Get Your Documents in Order

The due date for the Form 5500 always seems to sneak up, (it’s July 31st if your plan is on the calendar year), so you’ll want to get through the dreaded 401(k) audit ASAP. And one of the most frustrating parts of the audit is all the time you have to spend digging up the documents and data the auditor needs.

Our advice to you? Gather most of the documents the auditor will need and store them in one easy-to-reach place. That way, at the beginning of the audit, you can give them everything they’ll need. And then you get to dust off your hands and move on to more important (or, dare I hope, FUN…) things.

Tip #3 – Find a Good Auditor

When it comes to getting 401(k) audits from CPA firms, you really do get what you pay for. According to a study by the DoL, 39% of 401(k) audits contained major deficiencies which would lead to a rejection of Form 5500, putting 22.5 million participants and $653 billion at risk.

The DoL found a huge correlation between the number of audit failures,and the CPA’s level of 401(k) audit experience, so it’s paramount that you choose a CPA who specializes in 401(k) audits. Failing to do so could cost you big.

Tip #4 – Integrate Your Payroll & Recordkeeper ASAP

Let’s face it. Making 2019’s 401(k) audit quick and easy really comes down to not making any mistakes. Unless you have a team of robots and cyborgs doing your admin work, that’s just not going to happen.

That’s why recommend automating your 401(k) with an integration between your payroll and recordkeeping systems. A good, complete, 360 degree payroll integration saves you time by completely handling deferrals, contributions and loans. Best of all? Issues are identified, resolved and documented throughout the year, which will help you breeze through your audit at the end of the year.

Tip #5 – Make Your Plan’s Administration Someone Else’s Problem

Sometimes the easiest way to solve a problem is to make it someone else's problem. When it comes to 401(k) administration, that’d be a 3(16) fiduciary.

With a 3(16) fiduciary, nearly ALL of the tedious 401(k) administration work is taken off your plate. The best part? 3(16) fiduciaries sign Form 5500, which means they take legal responsibility for making sure your plan administration is done correctly. If the DoL comes knocking, they’re first in line. So offload the work AND liability of plan administration. Trust us, it’s easier that way.


And there you have it! 5 401(k) administration tips that’ll make 2020 your easiest year yet. If you’d rather not deal with 401(k) administration, give us a call! We’ve built an all-in-one 401(k) solution that takes the responsibility for plan administration almost completely off your plate. Check it out!

Evaluating 401(K) providers? Download our insider checklist now.
Go beyond a basic 401(k)
Give your employees more than just a 401(k), join the movement.
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Evan Ross
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1 Schwab 2022 401(k) Participant Study - Gen Z/Millenial Focus, October 2022.
2 As of 12/31/2022. Employees include both current employees and terminated participants with a balance.
3 "Morgan Stanley At Work: The Value of a Financial Advisor" Morgan Stanley, March 2022.
4 Sarah Britton was a client when she provided this testimonial through an independent third party review website. She received no compensation for her remarks. There are no known conflicts of interest in the provision of her comments related to the services provided.