401k Recordkeeping Checklist

401k recordkeeping services should be carefully chosen to ensure a viable 401k program.

I. 401k Recordkeeping requirements

1. Funds entering the 401k (contributions)
A. Is 401k payroll information provided electronically?

B. Are separate 401k accounts maintained for the various types of employer and employee contributions?

2. Funds within the 401k (account balances)
A. Pooled accounts. Have investment earnings been allocated in accordance with the 401k plan document?

B. Participant-directed accounts. Have individual allocations been test-checked?

3. Funds distributed from the 401k (distributions)
A. Separation from service. Has information for the 1099 forms, including withholding taxes, been properly recorded?

B. Loans. Has the system properly recorded loan repayments and outstanding 401k loan balances?

C. Hardship distributions. Has information for the 1099 forms been properly recorded?

II. Selection of 401k service providers

1. Choice of types of 401k providers
A. In-house. If you are considering this option, have you accurately assessed your ability to perform 401k work?

B. Third party administrators. Have you made sure that such organizations have the recordkeeping experience required?

C. Recordkeeping firms. Have you checked their professional reputations?

D. Bundled 401k service providers. Do they perform the 401k work or assign it to others?

2. Selection of particular 401k providers
A. Requests for 401k proposals. Have you requested sample reports?

B. Evaluation of 401k proposals. Have you used appropriate criteria to make these determinations?

1. Have you carefully analyzed and negotiated costs when the 401k plan was established?

2. Have you attempted to reduce 401k costs by the following methods?

A. Negotiation. Have you indicated to the recordkeeper that unit costs should decrease as the number of participants increase?

B. Changing providers. Have you considered all 401k work that will be required?

C. Shifting costs to employees. Have you considered adverse employee reaction and its effect on the 401k program's success?

Please list your 401k questions on our short form. We will reply promptly to concerns of employers and their representatives. Or call us at 718-793-9885. Our web site homepage contains additional useful 401k information.