A 401(k) plan administrator is an organization that oversees and manages a U.S.-based company's retirement plan for employees. Plan administrators ensure that 401(k) programs operate efficiently and comply with existing laws.
Their activities can include:
- Processing contributions to participants and beneficiaries
- Distributing funds to employees, and
- Providing information and support to plan participants.
A 401(k) is one of several types of defined contribution plans – including employee stock ownership plans, profit-sharing plans and 403(b) plans.
The retirement plan administrator handles administrative tasks for the 401(k). Additionally, the plan administrator helps employees with questions or assistance regarding their retirement savings:
- Communicates information on investment options
- Helps employees understand the benefits of contributing to the plan, and
- Offers guidance with any required paperwork or forms.
Defined Contribution Solutions
Discover how Alight's Defined Contribution Solutions can give your employees peace of mind.
401(k) administrators act as liaisons between the company and the employees. They ensure that communication is clear and inform participants of the plan's rules and regulations.
Fiduciary responsibility
Companies and their people require peace of mind that their 401(k) management is in the best interests of the participants. These requirements are otherwise known as fiduciary duties. One key part of these duties is to be in compliance with all legal requirements set forth by the US Department of Labor.
401(k) auto portability
One important feature of 401(k) plans is auto portability. This refers to the ability of employees to take their retirement savings with them if they change jobs. Workers have peace of mind knowing that their hard-earned savings are secure. Defined contribution plan administrators are taking a more active role in auto portability and offering this as a service to their employer clients.
Other functions of 401(k) administration
- Educating employees - providing employees with information about their 401(k) plans and helping them make informed decisions
- Access to resources and tools - Administrators help employees track their savings progress and adjust their contributions
- Final distribution of funds to employees when they reach retirement
Overall, effective 401(k) plan administration ensures employees have a reliable way to save for their future.
Learn more about how Alight's Defined Contribution Solutions can benefit your organization.
The content of this blog is for general informational purposes only and should not be considered an individualized recommendation or tax, investment, financial or legal advice. Each individual’s circumstances are unique, and therefore, you need to assess your own situation and consider consulting with your tax, financial or legal advisor before making a decision. The information contained herein is obtained from what are considered reliable sources; however, its accuracy, completeness or reliability is not guaranteed. Alight Solutions LLC and its subsidiaries and affiliates are not responsible for any errors or omissions or for the results obtained from the use of this information.
