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 definition. 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. 1  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. 2