Mapping vs Default

What ‘Payroll Integration’ Really Means
Many businesses make the mistake of believing their payroll service is fully integrated
with the administration of their 401(k) plans, when too often it is not
Think your company’s payroll system is fully integrated with your 401(k) plan? It all depends on the
Business owners routinely answer in the affirmative, failing to realize payroll integration means more than
simply salary deferral, especially in today’s hyper-connected technology environment. Contemporary
offerings now allow employees to manage certain functions of their retirement plans themselves,
streamlining the process and freeing owners and senior executives to spend more time performing
revenue-generating activities.
Technological innovation in recent years also means the services are fully scalable. Advantages that were
once reserved for larger companies with dedicated resources can now be realized by smaller counterparts
with a fraction of a budget.
In addition to the increased speed from the electronic transfer of information related to employee
retirement assets, a truly comprehensive and integrated system can do the following:
 Improve accuracy—Eliminating hours upon hours of manual processes each month through
automation also eliminates (or at least greatly reduces) human error, as well as the threat of
compliance and discrimination issues. Single sign-on features also means information is input once
and then automatically imported and repurposed in other areas, leading to fewer mistakes.
 Reduce costs—Automating redundant data-entry tasks that were once performed by dedicated staff
reduces overhead and redirects resources to more revenue-generating activities for the company.
Labor costs, time-consuming training, and the risk of fines from the aforementioned compliance and
discrimination errors are thereby reduced. This is especially important now that automatic enrollment
has led to higher participation rates.
 Increase morale—The difference in cost between hiring a new staff member versus retaining those
already employed is well-documented, and the former is much higher. Offering a 401(k) and giving
employees access to certain functions grants them a measure of control and self-determination. It
also reduces much of the stress associated with filing requirements that, performed improperly,
could expose the company to criminal and/or civil litigation.
 Reduce confusion—Fewer questions means less time wasted on the phone or emailing back and
forth with a customer service representative at the employer’s record keeper.
 Increase security—Employers have a fiduciary responsibility to ensure the personal information of
their employees is secure. With fully-automated and integrated platforms, the transfer of information
that affects the operation of the plan happens automatically, thereby reducing the number of people
and processes that interact with the system, thus increasing operational security.
The availability of these types of services—at affordable price points—means the justification is thin for
continuing with an inefficient, manual system. Before implementing any system, however, plan sponsors
and financial advisors must ask themselves if it’s fully automated and intelligent, one that transfers
information back and forth from the plan sponsor (via payroll) to the record-keeper.
The answer is available; it simply requires proper due diligence. Setting aside the time to do so can result
in potential cost-savings, increased efficiency and, most importantly, peace-of-mind.