I have a client in an industry that inherently has a high amount of turnover: think restaurant wait-staff. They offer a 401(k) plan for those employees who are over 21-years-of-age, who have been there one year, and who have worked at least 1,000 hours in a year. The client doesn't have any processes in place for regular reporting of changes to employee data, and we're discussing the merits of 1) uploading data for all employees quarterly or 2) only uploading data for employees who become eligible each quarter. I have scoured the 401(k) plan site, but I feel like we might be missing something. Any reasons to create a process for uploading data one way over the other?
Updating Employee Data for 401(k) Plan
You want to upload to your 401(k) provider data for all participating employees, not just new ones, and not all. More fundamentally, how are amounts withheld being treated? Are amounts withheld only from eligible participants? How are balances handled for employees who are terminating, for whatever reason? Who maintains participant records?
Do they use a payroll service, or do their own?
Legal plan compliance issues may be more critical first steps than data upload issues.