ADP, Gusto, Paychex, and the rest… they make payroll (and life) easier.
Small businesses can save millions of dollars a year by forgoing an internal payroll department and outsourcing to one of these respected companies.
But watch out! Changing payroll providers is a headache. You could find yourself jumping working hard in the pursuit of convenience.
Just when you think it’s time to breathe a sigh of relief, it’s not.
Don’t do what so many people do and ignore this vital last step.
If you’re about to switch providers, or you just did, DO THIS.
When you’re all set with a provider, the experience is seamless: Information from new hires is captured and retained online, everything filed electronically.
Behind the scenes, though, something important can get lost:
As long as someone has an account in your 401(k) plan, you’re required to retain their data. Former employees can go months, years, even decades without moving their 401(k)—and their data remains your responsibility.
With that in mind, you need to import all historical data from your former payroll provider. Without it, your business could be subject to significant penalties if the IRS or DOL takes interest in your 401(k) plan.
And for most enterprises, that’s only a matter of time.
If you haven’t switched yet, you have ample time to make all the right moves. Back up your data and retain it according to your privacy and security policies—on a separate cloud service or on-premises at the office.
Once you switch over to your new provider, they’ll give you information on the best way to upload historical files and integrate them into your records.
If you’ve already switched, hope is not lost.
Providers may offer 30, 60, or 90 days of access to your historical data—or you may lose access as soon as your contract period ends. They can maintain this data for years, however, so you can still reach out.
There might be additional fees or a delay, so reach out soon.
To get on track with 401(k) compliance, contact Cassell Plan Audits.