How To Manage Your Michigan 401k Plan
Offering a 401k plan is a key part of a great benefits offering and will make your business more attractive for prospective candidates. Equally important is communicating employee options throughout the year while taking the appropriate steps to maintain a healthy and compliant 401k plan. However, it doesn't matter what you offer, if you don't know how to properly manage your 401k plan.
Consider these tips to manage your 401k plan effectively:
Communicate 401k Contribution Limits to Employees
In early November of 2021, the IRS announced changes to 401(k) limits and planning. Changes were made to the amount individuals may contribute to their 401(k) starting in 2022.
Now, employees may contribute up to $20,500, up from $19,500 in 2021.
It's a good idea to communicate limits to employees and provide resources to help them model their contributions and select 401k plan investment options. You can provide helpful 401k information to employees through the company intranet and in your 2022 open enrollment materials or ongoing benefit enrollments and administration.
Continue to Offer 401k Plan Options, Resources, & Information Throughout the Year
Year-end isn’t the only time to communicate with employees about making a 401k contribution and the applicable limits. To properly manage 401k plans, you have to be ready for employees who may want to make changes to their contributions or begin contributing for the first time, due to changes in their earnings and living expenses throughout the year.
To keep employees informed and make it easier for them to enroll in your 401k plan at any time, take the following actions to better manage your 401k plan:
- Offer financial education sessions
- Provide flyers, brochures, and investment illustrations to help employees understand how the 401k plan works, review new contribution limits, and know where to get access to plan balances and instructions for rollovers and loans
- Consider automatic enrollment for new hires
Manage Your 401k Plan Efficiently
Managing your 401k plan is a complex undertaking, especially when considering all the changes in individual and company contributions each pay period. At any time throughout the year, incoming employees are establishing new accounts while other employees are repaying 401k loans or taking account distributions.
In addition, you also need to keep the 401k plan in regulatory compliance and ensure employees do not exceed contribution limits. Keeping track of the activity in your 401k plan requires a solution that pulls together all the relevant plan data so that you can track plan compliance and plan in-flows and out-flows.
Workforce PayHub’s financial connectivity solution does just that and provides you with tools and carrier integrations, such as:
- Uni- (180) and bi-directional (360) data flows to retirement plan vendors and providers
- Automated reports to show plan activity for every pay period
- Integration with a range of HRMS and third-party administrator platforms
- Correspondence and reminders to help you reduce risk, avoid regulatory fines, and keep your 401k plan in good regulatory standing
With Financial Connectivity, you’ll be on your way to better compliance and a more efficient way of managing your 401k plan. Take these steps to keep employees informed about their options while seamlessly delivering retirement plan data to your HR and benefits administration staff.
If you are a Michigan employer, or an employer struggling with 401k management, then perhaps it's time for a new, modern, cloud-based payroll solution for your business. With Workforce Payhub, you'll finally be able to better manage your 401k benefits, so you can focus on what really matters for your business.
To see how we are already helping countless businesses manage their 401k plans, contact us today.