401(k) software helps organizations offer and manage retirement plans to their employees and ensure compliance with government regulations. 401(k) platforms are used to design a company’s retirement plan, select the fund’s investment options, onboard employees, manage contributions, and monitor employee participation through an administrative dashboard. Organizations also use these programs to provide an interface that allows employees to manage their contributions, make investment decisions, and manage actions like rollovers, loans, and distributions. 401(k) software is different from pension plans, which are funded by the employer, not the employee, and does not allow control over fund contributions, but guarantees a monthly check on retirement.
These systems are most commonly used by small business owners, finance and accounting teams, and human resources (HR) managers, enabling them to offer retirement plans to employees, encourage participation, and support the right investment strategy given an employee’s circumstances. 401(k) software can integrate with a company’s payroll software, which reduces the manual work of processing contributions as part of each payroll cycle. 401(k) software can also help companies process IRS documents and manage compliance with the Employee Retirement Income Security Act (ERISA) and Department of Labor (DOL) regulations.
To qualify for inclusion in the 401(k) category, a product must:
Offer plan administrators an onboarding process that enables 401(k) plan design
Provide plan administrators with way to monitor employee participation and access plan reports
Offer plan participants an onboarding process that enables them to set contribution rates and select investments
Provide plan participants a way to check their balance and change their investments
Help plan administrators prepare IRS forms and monitor compliance with government regulations