401(k) Tips for Employers and HR Managers

5 Tips for Operating your 401(k) Plan, 403(b) Plan, or other Qualified Retirement Plan Program

Offering a retirement program in the workplace is a huge benefit to employees, employers, and HR managers. A qualified retirement plan, such as a 401(k) plan, not only creates value but increases the chances of employee engagement and retention. It is a good idea to review the basics from time to time to ensure your plan is operating at peak performance. Below are 5 great tips for Employers, HR Managers, and Plan Administrators that we hope will help you. Connect with us if you’d like to dive into the details on any item, we love this stuff.


When do new hires enter the retirement plan? Is it the first of the month? And if so, would a March 1 hire enter on March 1 or April 1? A 401(k) TPA will know this immediately for your plan and is always your best resource.

Eligibility, specifically the entry date, is the point in time when a new employee first becomes a participant – whether or not he or she starts contributing. These features are part of a Plan's Design. Eligibility is not necessarily the same as enrollment. While a plan may stipulate that one is eligible after 3 months of employment, do they enter the plan the first of the month follow? Or, the next payroll? Or at certain points in the year, such as the first of the next quarter following satisfaction of the eligibility period.

Be “operationally compliant” - align your internal operations with the Plan's requirements to ensure effective management. Know the 4 main components that make up eligibility – age, length of service, hours worked, and entry dates.


The SPD (Summary Plan Description) is the participant’s version of the retirement plan. This is generally shorter than most other plan documents; but, it is the main resource for new and existing plan participants on the features of the 401(k) plan or 403(b) plan. Presented in a question and answer format, the SPD is easy to ready. Retirement Plan’s are complex enough for even the experts; the SPD is not. Distribute the SPD to all eligible plan participants.


Depending upon the size of your retirement plan (number of participants) you may be subject to different requirements. Segregate from corporate assets and deposit employee contributions as soon as administratively feasible but no later than 7 days from the end of the payroll, in general. Establish a recurring schedule that coordinates the funding of employee contributions at the same interval each payroll.

Why is remitting contributions timely important?
An example will help: Assume you have historically deposited withholding’s by the 5th day after payroll. The last 10 contribution remittances were processed 2 weeks after payroll. In the event that the Plan comes under review or audit, you may have to explain to the IRS or DOL why it took so long. In addition, you will owe interest on those late contributions. Be timely. It’s required. Late deposits are common, but there is a fix. If this is an issue in your Plan please Contact us for support.


A retirement plan does not have to allow actively employed plan participants access to their account. Retirement plans, unlike savings or checking accounts, limit the availability of funds; in some instances, distributions to active employees are prohibited. In the most strictest sense, there are only 4 events that trigger a “distributable event” – death, disability, termination, and retirement. A retirement plan could, however, allow for loans, in-service withdrawals, or hardship withdrawals; but it is not required to do so, unless explicitly designed to offer those options.


Whether financial advisors, TPAs, consultants, attorneys, or any other retirement focused professional – seek out advice. A retirement plan is complex; as such, we wholeheartedly encourage you to ask questions. It is hard for any one person to be an expert of all things, for this reason, consider more than one expert at the table – a qualified 403(b) or 401(k) TPA, Investment Advisor, and perhaps an Asset Provider CRM. With all their unique, specific, skills your team will support you and your retirement plan. The fact that you seek guidance to help your participants enjoy the best retirement plan possible is essential to success. After all, you may have a fiduciary requirement if you’re the plan trustee, owner, or other authorized plan representative acting on behalf of a fiduciary.

Recap: 5 Tips

  1. Review the Plan's Eligibility requirements - there may be subtle nuances that impact entry of new and rehired employees.
  2. Provide new participants with a copy of the SPD - this is their guide to the rules of the plan. Other applicable notices, disclosures, forms, and materials may be required as well.
  3. Remit deposits in a timely manner - generally, no later than 7 days after the funds have been withheld from payroll.
  4. Be familiar with the distribution options that are allowed. This is useful for active as well as terminated plan participants.
  5. Seek Advice from Experts. We don't know what we don't know, we encourage asking questions of the right type of experts in our industry.