PLAN PAYROLL SERVICES
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As a plan sponsor, you’re responsible for making timely contribution deposits and updating demographic information with your payroll provider and recordkeeper. This is a critical function required to keep your plan compliant. It can be difficult to create and maintain a good process to handle these important details when you’re already busy running your business and don’t have the time or staff to spare.
Any staff, technology or workplace problem that results in a delay or failure to transmit 401(k) deferrals, loan repayments, process participant-requested changes, implement automatic enrollments or automatic contribution increases can result in DOL audits, penalties and taxes. Save yourself the hassle and the risk by outsourcing this function to us.
With Fiduciary Outsourcing’s Plan Payroll Service, you can rest easy knowing you have an expert partner helping to make sure this important work gets done correctly and on time—every payroll period.
Gather data on deferral and other demographic changes.
Gather information for the recordkeeper to determine eligibility for employees to be automatically enrolled, etc.
Enter the required information into your payroll system before you process payroll for the pay period.
Authorize ACH transfer of funds.
Transmit deferrals, loan repayments, matching contributions and census data to your plan’s recordkeeper.
You’ll save your staff’s time in performing these tasks every period.
Fiduciary Outsourcing takes fiduciary responsibility for ensuring changes are made correctly.
Fiduciary Outsourcing takes fiduciary responsibility for the timely transmission of 401(k) deferrals and loan repayments.
Fiduciary Outsourcing maintains a fidelity bond for the plan so you may elect to discontinue your own fidelity bond coverage. This may partially offset the cost of service.
Avoid the Risk and Cost of Errors by Outsourcing to Fiduciary Outsourcing
Example: If a participant is not automatically enrolled on time or a change to the 401(k) deferral rate is not made when it should be, the Plan Sponsor generally owes the participant 50% of what should have been deposited plus interest for the period of time the error occurred.
Example: Let’s say Joe should have entered his 401(k) plan on January 1, 2016 saving 6% of pay. However, the plan sponsor forgets that their plan includes automatic enrollment and fails to make the change in payroll. The TPA finds the error in September 2017 when doing the 2016 year-end work. Assume Joe makes $10,000 per year. He’d have saved $600 in 2016 and about $400 in 2017 by the time the error occurs. The Plan Sponsor would owe ½ of this amount or $500, from the company, to Joe, for the error plus interest.
If 401(k) deposits aren’t transmitted on time, the Plan Sponsor owes the participants interest on the money for the period of time the money wasn’t in the plan. There is a also 15% excise tax on the amount of the interest. There is a question on the Form 5500, the plan’s annual tax return, that specifically asks if the plan had any late 401(k) deposits and if so, how much. There is usually a TPA fee to calculate the lost earning and prepare the excise tax filing. And, on any DOL audit, the DOL will ask about timing of 401(k) deposits.