Retirement is a funny thing. On the one hand, it always feels like some faraway and distant possibility. On the other hand, you have people constantly reminding you to start saving for your retirement as soon as possible, otherwise you won’t be able to retire when you want to (or maybe not at all). As a business owner or HR manager in charge of your organization’s benefits, this only becomes even more complicated, as now you are not only worrying about your own retirement plan but also the retirement plans of your employees and coworkers as well. And all of that isn’t even including the actual stress that comes with managing just the retirement plan, let alone managing whether other employees are enrolled in one and the enrollment process. Either way, regardless of your position within the company, saving for retirement can be stressful and, at most points, feel very overwhelming.
At Payday HCM, we understand how planning for retirement can feel like a very complicated, difficult process. We have gotten plenty of questions from our clients about all sorts of things related to retirement: which types of retirement savings accounts are best, when to start saving, the kinds of plans you should offer employees, etc. One of the larger considerations when it comes to offering a 401(k) plan to your employees is the actual management of those 401(k) plans. Between finding a vendor, taking out deductions, and sending the deduction information to the vendor, 401(k) management can be a handful. And while we can answer some of the more specific questions, we can help you with things like payroll deductions, reporting, and moving funds to your 401(k) vendor.
So, in this article, we’ll be going over how Payday can help you manage your business’s 401(k) plans. We’ll start by briefly talking about what a 401(k) is and how it works before diving into the specifics of how Payday can help make the 401(k) management process a little bit easier. By the end of this article, we hope to demonstrate how Payday can help take your 401(k) management process from stressful to stress-free.
In this article, you will learn:
- How Does a 401(k) Work?
- Finding a 401(k) Vendor with Payday HCM
- 401(k) Plan Management with Payday HCM
How Does a 401(k) Work?
Before we get into specifics on how Payday HCM can help you manage your business’s 401(k) offerings, we’ll briefly cover how a 401(k) works.
What is a 401(k)?
A 401(k), named after a section of the U.S. Internal Revenue Code, is a workplace-sponsored retirement plan that enables employees to invest a portion of their salary, either pre-tax or after-tax, into an investment account. A pre-tax 401(k) plan is referred to as a traditional 401(k), which lowers your taxable income in the current year; traditional 401(k) funds will be taxable upon withdrawal in retirement.
In contrast, a Roth 401(k) is contributed to with after-tax money, but qualified withdrawals are tax-free in retirement. These retirement accounts come with contribution limits: In 2025, the IRS allows individuals to contribute up to $23,000, with an additional $7,500 in catch-up contributions for those 50 and older.
Employers and 401(k) Plans
As stated above, a 401(k) is an employer-sponsored retirement plan. Typically, a 401(k) is offered to employees as part of their benefits package. Employees will have the option of signing up and putting money into a 401(k), or, in some cases, employees will be automatically enrolled.
Many employers offer matching contributions for their employees’ 401(k), which can vary from two to three percent all the way up to full match contributions. Payday’s Director of Operations, Liz Mink, highlighted the importance of offering a 401(k) to help attract and retain employees.
“We know it's important to invest your money if you can and offer a 401(k) because a 401(k) is a benefit that employees seek out for retirement and savings, and so forth,” Mink said.
Finding a 401(k) Vendor with Payday HCM
Now that we have a better understanding of what a 401(k) is and the employer’s role in offering one, we’ll dive a bit deeper into the process of finding a vendor both with and without working with Payday HCM.
401(k) Vendors
Offering your employees a 401(k) plan starts with researching which vendor you’ll choose to work with. There are a large number of different vendors to choose from, all with varying options in terms of how employers can approach managing the 401(k) plan that they offer. The vendor will manage the 401(k) plans while you provide the vendor with information about your business, deduction information, and any other information they may need for plan administration.
The cost of working with a vendor will also vary depending on the vendor you select, as well as, in some cases, the pricing tier you opt for. Vendors will charge general service fees for plan administration, start-up fees, and other possible additional fees for things like record keeping or investment services.
How Payday Can Help You Find a 401(k) Vendor
At Payday, we understand the importance of offering a 401(k) to your employees, but we also understand how the search for the right 401(k) vendor can be daunting. For Mink, finding a 401(k) vendor is all about finding the right balance between cost and returns.
“Probably the cost—not only to the company but also to the employees—and then the investments… So, an owner of a company might look at the portfolio, and they might say, ‘These are great investments, and the returns are great, so we're gonna go ahead and go with them,’” Mink said.
We’ve worked with a number of different 401(k) vendors over the years and provide your business with a number of recommendations to help make the search process less strenuous. Of course, you know your business and your employees best, though, so the decision on which vendor you go with is ultimately still in your hands.
401(k) Plan Management with Payday HCM
Finally, we’ll go into more detail on the actual management of a business’s 401(k) plan offerings and how Payday can help streamline this process.
Working With a 401(k) Vendor
Once you’ve selected your vendor and decide to offer your employees the option of a 401(k) plan through said vendor, you’ll now need to provide them with certain information in order for them to properly manage your employees’ 401(k) plans. Depending on the size of your business, this can become a time-consuming process.
When it comes to managing your employees’ 401(k) plans, you’ll need to provide your vendor with information about the deductions that will be taken out of an employee's pay, as well as any employer contributions you may have. You’ll also need to work with the vendor to ensure your deduction amounts line up with the amounts they place into the 401(k) plans.
How Payday Can Help Manage Your Employees’ 401(k) Plans
Payday can help take the load off of your business’s shoulders when it comes to working with your vendor and managing your employees’ 401(k) plans. The goal, Mink said, is to help streamline not only 401(k) plan management but payroll processing as a whole by managing deductions and reporting deduction and employer contribution information to the vendor.
“Their 401(k) plan dictates all the rules to us. We set that up, we take the deductions, and then we can move those funds, their deferral amounts… So, instead of the client having to file manually… we just have a seamless process [where] deductions are taken, files [are] created [and] uploaded, and then [the vendor] pulls the money and it's done.” Mink said.
Make Saving for Retirement Less Tiring With Payday HCM
Just the thought of starting a retirement savings plan is likely enough to stress you out, let alone offering a 401(k) plan to your employees. But, as stressful as it is, offering a 401(k) plan as part of an employee’s benefits package can provide some serious returns in the long run for both the employee and employer. With Payday’s ability to streamline the 401(k) management process, you can worry less about deductions and contributions and focus more on the things that matter most to you.
Although you’ve probably heard it a hundred times before, setting up a retirement savings plan, or smartly managing your current one, is crucial to retiring on your own terms. With Payday HCM, all of our clients work with a dedicated team of customer service representatives to help them manage all of their payroll needs, from 401(k) deductions to employer contributions. Learn more about how Payday’s payroll services can help you manage your business’s 401(k) offerings and put more time back into your day. Or, if you’re a current client, contact your customer service representative to start taking full advantage of everything Payday has to offer.
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