Why 401(k) Management Should Be a Top Priority

4 of October, 2023

So you’re an HR manager or business owner, and you want to make sure your employees’ 401(k) plans are in good shape. You know how important retirement benefits are for attracting and retaining top talent, not to mention staying on the right side of regulations.

But between onboarding new hires, handling payroll, and a million other tasks, properly managing 401(k) plans often falls to the bottom of the priority list.

That is until an audit rolls around or an employee complaint comes in, and then it jumps right to the top. The last thing you need is penalties, fines or a lawsuit because you dropped the ball on compliance.

The good news is with the right tools and processes in place, 401(k) management doesn’t have to be a headache or time drain. In fact, it can largely run on autopilot, freeing you up to focus on more strategic priorities.

What Exactly Is a 401(k) and Why Is It So Important?

A 401(k) is a retirement savings plan that many employers offer to help you build up money for your golden years. Contributions to a 401(k) are automatically deducted from your paycheck before taxes, so you get an immediate tax break. The money in your account can then grow tax-deferred until you withdraw it in retirement.

Why is this so important? For starters, a 401(k) makes it easy to save for retirement since the money comes right out of your paycheck before you even see it. It also provides tax benefits that help your money grow faster over time thanks to compound interest. Many employers will also match a percentage of your contributions, which is free money that can significantly boost your returns.

To get the most out of your 401(k), take full advantage of any employer matching by contributing at least enough to get any available match. Increase your contributions by at least 1% each year to keep up with inflation. And choose investments that match your financial goals and risk tolerance, like a target date fund.

The Importance of Properly Managing 401(k)

Properly managing 401(k) records and staying compliant with regulations is crucial. Sesame’s Document Management tool helps simplifies 401(k) administration by allowing you to organize all plan documents, amendments, participant notices, and correspondence in one place. Storing information electronically also makes it easy to quickly locate any document when needed and ensure nothing slips through the cracks.

Keeping good records and regularly reviewing your plan documents is key to operating a compliant 401(k). Let Sesame equip you with an efficient document management solution so you can focus on what really matters: helping your employees save and invest for a secure retirement.

Best Practices for 401(k) Management and Staying Compliant

Managing your company’s 401(k) plan should be at the top of your priority list. As an HR manager or business owner, staying on top of 401(k) compliance is crucial. If you don’t, you could face penalties from the IRS or Department of Labor.

Best Practices for 401(k) Management

To properly manage your 401(k), follow these best practices:

• Review plan documents annually to ensure they’re up-to-date with current laws and regulations. Things like eligibility requirements, contribution limits, and distribution rules are constantly changing.
• Provide regular employee education about the 401(k) plan. Employees should understand their investment options, the benefits of contributing enough to get any match offered, and how to make the most of the plan.
• Monitor employee contributions and take action if someone isn’t contributing enough to get the full company match. That’s free money they’re missing out on!
• Review fund performance and fees regularly. Make sure the funds offered are performing well and fees are reasonable. Replace underperforming funds if needed.
• Maintain meticulous records of all plan activity, contributions, distributions, amendments, etc. Documentation is key to staying compliant in the event of an audit.

How Sesame’s Document Management Tool Can Help

Sesame’s document management software makes it simple to store all your 401(k) records in one place. You’ll have an audit trail showing you maintained proper documentation, and you can grant access to specific records for authorized individuals. Staying on top of 401(k) management and compliance has never been easier with tools tailored to your needs. Focus on what really matters – helping your employees save for the future.

How Sesame’s Document Management Tool Simplifies 401(k) Administration

As an HR manager or business owner, managing your company’s 401(k) plan likely requires wading through mountains of paperwork. From enrollment forms and contribution changes to compliance documents and distributions, the amount of records to keep track of can quickly become overwhelming.

That’s where a document management system like Sesame comes in. Sesame helps organize all your 401(k)-related files in one central location, so you can find what you need, when you need it.

Staying compliant with IRS rules and regulations is critical. Sesame makes this simple by providing pre-made folders for all the necessary document types. As long as you file everything in the correct place, you can have confidence you’re meeting all compliance standards.

When it’s time for an audit or to access participant data, Sesame allows you to instantly search across your entire document library. Just enter a few keywords like the employee’s name or Social Security number to find what you need in seconds. No more wasting hours digging through filing cabinets!

Managing a company’s 401(k) plan is challenging enough without the added hassle of disorganized documents and non-compliance risks. By automating and simplifying recordkeeping with an intuitive document management tool like Sesame, you can ensure your 401(k) administration is a well-oiled machine.

Conclusion

So there you have it, folks. Managing your company’s 401(k) plan should be a top priority for any HR leader or business owner. Not only does it provide key benefits and perks to help you attract and retain top talent, but failing to properly administer the plan can lead to penalties, fines and legal trouble.

Make it a point to stay on top of all the rules and regulations, keep meticulous records, choose a reliable provider, and educate your employees. Their financial well-being and your company’s compliance depend on it.

While it may seem like a hassle, using tools like an automated document management system can help streamline the process and give you peace of mind that you’ve got this important responsibility covered. Your employees and your future self will thank you.