When someone asks, “What makes the perfect pairing?” you expect to receive many responses, such as peanut butter and jelly, Fred and Ginger, Laurel and Hardy and payroll and 401(k). Yes, payroll and 401(k) integration are among the world’s perfect pairings. In order to operate a 401(k) plan of any size and expect it to run accurately and efficiently, the 401(k) administrator needs one thing … data, and lots of it. This data can be seamlessly supplied by the payroll system to which the 401(k) is connected.

The constancy and detail of the data exchanged between payroll and a third-party administrator (TPA) to run a 401(k) plan can be overwhelming. For instance, to determine eligibility, your client needs the employee’s date of hire, date of birth and hours worked. Once they determine if the employee is eligible, then the employer needs to notify the employee and possibly enroll them in the plan. To enroll an employee usually requires the collection of a paper enrollment form; one copy goes to the office manager who processes payroll and another copy goes to the TPA or possibly you, the CPA. Each pay period, deferral amounts must be communicated for every employee between the two systems, opening up tremendous room
for error.

This process is repeated many times during the year, through newly eligible employees and new hires to the organization. Additionally, every time employees change their deferral amount or establish a loan, that information must be tracked and accounted for by both payroll and the
401(k) recordkeeper.

Imagine if every time you wrote a check you had to separately notify the bank. This would become old quickly. Yet businesses continue to accept having to notify a TPA every time they alter employee data or deferral percentages in their payroll systems. It’s time they demand and enable the conveniences of data automation.

Other recordkeepers may assist with easing some of the burden this creates, but Paychex offers a fully integrated payroll and 401(k) solution, which effectively eliminates any manual processing for your clients. With Paychex retirement plan administration, participant level data flows freely between the 401(k) recordkeeping platform and payroll, eliminating manual intervention and reducing the potential for errors. Once the plan is established, Paychex tests the plan on a quarterly basis and provides quarterly participant statements and signature-ready 5500 tax returns. All while your clients continue to report their payroll as normal.

As a leading national provider of retirement plan administration, payroll processing and human resources, Paychex is uniquely positioned to develop an integrated end-to-end retirement solution. The Paychex solution provides simple and affordable retirement services for your small business clients, while enhancing your status as a valued and trusted advisor.

For more information on maximizing the perfect pairing of payroll and 401(k), please visit http://www.cpa2biz.com/PaychexProgram.

Paychex is proud to be the named provider for the firm-based AICPA Member Retirement Program and preferred provider of payroll and retirement plan services for CPAs through the AICPA Business Solutions Program.