Manual data extraction requires HR teams working around the clock for days or even weeks to submit their 5500s by the deadline and prepare for the audit, with no guarantee of accuracy.
With HR focusing solely on 401k compliance, other primary HR duties would have been put on the back burner. Alternatively, they may require an outside temp agency to assign full-time administrators to help them meet the compliance requirement.
The Employee Retirement Income Security Act (ERISA) requires administrators and plan sponsors of 401k plans with 100 or more participants to file a form 5500 annually with the Department of Labor and the IRS, detailing each employee’s contributions. In addition, these organizations are audited annually to ensure that paycheck deductions are submitted to 401k plans within a reasonable time period, to protect both participants and beneficiaries. Non-compliance, or missed deadlines for filing the 5500, amounts to substantial penalties for companies.
During the initial annual audit, it’s common practice for most auditing firms to request information that goes back between 5 and 7 years. This requires pulling data from disparate sources, including PDFs, and rekeying it into the proper format. This is not only extremely time consuming, but if done manually, the process is prone to human error.
In order to comply, HR department’s must provide the amount of payment and the remittance date to the 401k provider for each of its employees for 24 pay periods, dating back five years. This information often exists in large PDFs and Excel files—name, amount, remit date, etc.
Datawatch Monarch empowers HR teams to quickly capture the data they need—in minutes without extensive training or IT resources required. With Datawatch, HR can focus on servicing its employees versus its compliance requirements, saving weeks of man-hour time and avoiding costly penalties.