Diane showed up in my office with a thick folder in hand. David, I’ve had it with our payroll company’s 401(k) plan. I thought it would be simple—just payroll and retirement—but it’s been nothing but problems.”
I motioned for her to sit. “Tell me what happened.”
“It started with automatic enrollment. They told us the system would handle everything seamlessly. Payroll would talk to the 401(k) platform, and it would all be automatic.”
I nodded. “That’s the promise they make.”
“Right,” she said, “but then we got audited by the IRS. Turns out, several employees were never enrolled—even though they never opted out. We had no idea until the audit. When we asked the payroll provider what went wrong, they just shrugged and said, ‘It’s the employer’s responsibility to catch that.’”
“How much did that cost you?”
“Over $25,000 in catch-up contributions and penalties,” she said flatly. “And the payroll company offered nothing but silence and finger-pointing.”
“And that’s not all, is it?” I asked.
“Nope,” she said. “During a document restatement, they quietly changed our safe harbor match eligibility—from one year to six months. We didn’t catch it because we had no reason to assume anything had changed, but two years later, new hires were receiving matches way earlier than intended.”
“Let me guess,” I said. “They said you signed off on it.”
Dianne nodded. “And the person who signed wasn’t even authorized. When we brought that up, they just said, ‘Well, our system showed they were authorized.’”
I sighed. “I wish I could say I’ve never heard about things like this happening.”
“But wait, there’s more!” Diane added in a voice that mimicked a late-night TV commercial. “We had a death benefit distribution that took over two months to process. The beneficiary was in serious need—calling, pleading—and the provider wouldn’t release the funds because of a $500 RMD check they insisted on reversing first. Over $30,000 just sat there while they sorted out their internal process.”
“That’s inexcusable,” I agreed.
“It’s not just the errors, David; it’s the runaround. Every time I call, I get a new person. I have to re-explain everything from scratch, and they always say, ‘We’ll follow up.’ Of course, no one ever does.”
I leaned back in my chair. “Diane, these bundled payroll-401(k) platforms sell simplicity, but all they really offer is a disconnected system dressed up as integration. The technology isn’t the problem; it’s the lack of stewardship. No one’s really watching your plan.”
“I just wanted to do the right thing for my team. Instead, I’ve spent the last two years cleaning up someone else’s mess.”
“Well, you’re here now,” I said. “Let’s rebuild this plan—correctly, carefully, and with people who actually know your plan and your name.”
She smiled. “That sounds good. It’s time our plan started working for us, instead of the planners working against us.”
“Exactly,” I said. “Let’s make it better—so the next conversation isn’t about what went wrong, but about how well it’s working.”
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