As HR/Payroll outsourcers look to continue to attract more and in some cases smaller businesses to their outsourced model they increasingly look to build data integration with third party systems to gain efficiencies and drive down costs. Thus the intersection between Human Resource/ Payroll software and retirement services recordkeeping software (plan administration) is heating up.

ADP and Paychex market 401(k) recordkeeping systems that exchange data with their HR/Payroll software seamlessly. This data exchange clearly has become a key value proposition for these firms. From a benefits or HR manager’s prospective the ability to enter new or terminated employee information once into their HR/payroll and then have that data automatically recorded in the retirement services record keeping software is a significant advantage as it eliminates redundant data entry, unsynchronized data sets, system omission errors and saves time and has a clear return on investment. In addition, as the system of employee record the HR/Payroll software has the ability to automate a census output to the 401(k) TPA and advisor which is a major time saver for the HR/Payroll administrator. The TPA and advisor have the ability to record which employees are terminated and when, as well as have access to this information in a timely fashion. For firms that perform plan administration; including compliance testing, employee deferrals and loans, etc. having ready access to the payroll data allow 401(K) plans to run more efficiently.  In addition, the definition of compensation for plan purposes is not always the same as for payroll so access to the full year compensation figures is significant.

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