Retirement plan recordkeeping is a complex process, and one of its key aspects is the payroll process. Ensuring that the payroll data used in retirement plan recordkeeping is accurate and up-to-date is important. However, recordkeepers face numerous challenges when it comes to payroll processing for 401(k) plans owing to its sheer volume and dynamic nature.
Inaccurate payroll processing can lead to discrepancies in participant account balances and costly errors. Payroll defects can also result in erroneous reporting to the IRS or DOL and may result in fines and penalties.
This article will discuss some of the major payroll challenges faced by recordkeepers and retirement plan administrators. We will discuss the importance of having a strategic payroll-to-plan interface. We also provide actionable insights that can help improve the overall efficiency and accuracy of 401(k) recordkeeping.