When you integrate your 401k plan with a payroll provider, employee information such 401k contribution rates and employee salary changes can flow between the systems automatically. This can save you time and can reduce potential for errors too.
There are a few things to know upfront. First, not every payroll provider integrates with every 401k plan provider and vice versa. Second, for many businesses, inputing or uploading a file each payroll for 401k contributions is pretty simple. Third, if you take advantage of integration, once it’s setup which takes a little work, it can be a nice win. Lastly, there are two types of integrations, and you will need to see what your providers support to see if it’s what you want. Regardless, payroll integration can be cool, but does not outweigh the duties or cost and saving benefits of having a great a 401k plan vs. an average or expensive one.
180-degree versus 360-degree payroll integration
Depending on your payroll provider and your 401k provider, you may have 1) no payroll integration options, 2) a 180-degree payroll integration option, or 3) a 360-degree payroll integration option. If you have no integration options, there are generally simple and timely ways to manage, and your 401k provider can help you.
360-degree payroll integration offers the most automated and synched integration. The data exchange is full circle from payroll provider to 401k provider and back to the payroll provider. After you upload employee data (aka. employee census data), you will have minimal involvement. Processing is done automatically. If an employee makes changes to her contribution rate, takes a 401k loan, of if her salary is changed, all this is taken care of via the system integrations.
180-degree payroll integration is a one-way street. The data only flows from the payroll provider to the 401k provider. You can automate the contribution process, but for any changes the employees make, the employer needs to manually update the payroll system.
ShareBuilder 401k solutions offer integrations with various payroll providers, so if this of interest, we’re happy to see what can best simplify your benefits.