I f you’re thinking of hiring your payroll provider to also serve as your 401(k) plan’s third-party administrator (TPA), stop. Think again. Then think again harder. I’ve been an ERISA attorney for more than 25 years. In that time, I’ve cleaned up more compliance messes caused by payroll providers moonlighting as TPAs—specifically ADP and Paychex—than I care to count. And the problems are rarely one-off accidents. They’re systemic. They’re baked into the business model. And they’re costing plan sponsors like you money, time, and peace of mind. Let’s get this out of the way early: payroll has almost nothing to do with plan administration. If your salesperson is telling you otherwise, they’re either uninformed or spinning you a story to make a sale. 401(k) administration isn’t about processing checks or cutting W-2s.
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