Why 401(k) census information is important
Current census data allows your plan recordkeeper to connect directly with your participants. With this connection, your recordkeeper can deliver your participants a secure online experience—giving them access to contribution, account management, and advice features—that can help improve their retirement readiness. It also permits your recordkeeper to furnish Employee Retirement Income Security Act of 1974 (ERISA)-required plan notices to participants electronically, which helps you fulfill your duties as a fiduciary.
The three types of 401(k) census data
Census information generally falls into three categories:
1 Personal—Such as name, date of birth, Social Security number, home address, and email address
2 Employment—Such as start date, employee status, eligibility date, and hire date base salary
3 Contribution—Such as employee deferral (dollar or percentage) amounts
Because personal, employment, and contribution information changes frequently, your 401(k) recordkeeper will ask you to update your census records regularly. Some plan sponsors update census records themselves, while others rely on a third-party administrator (TPA) or payroll provider to do it for them. Either way, recordkeepers often make online census update tools available to make it easier for you (or your TPA or payroll vendor) to provide up-to-date census information.
How current census data helps your retirement savings plan work better
Digital tools for participants that help with retirement readiness—such as online enrollment, contribution and account management, education, and advice—are only available to those who can access their account online. Experience shows that participants who use online tools are better prepared for retirement, and up-to-date census information is required for online access.
Employees who enroll online save over 60% more than those who use pen and paper.
Additionally, current data helps your recordkeeper secure participant accounts by enabling multifactor authentication to prevent unauthorized access.
Census information also makes it easier for you to manage your plan. With accurate census data, your recordkeeper can share plan health and benchmarking metrics to help you target areas of improvement with plan design changes or targeted
At the same time, current census information allows your provider to perform critical administrative tasks correctly, including determining eligibility and making contribution calculations. So the more up to date your census data is, the more efficiently your plan can operate.
Finally, certain disclosures, such as annual notices and summary plan descriptions, are required by ERISA—and failure to deliver them can lead to penalties. Fortunately, required disclosures can be provided electronically—but only if your participants have online account access or if your recordkeeper has current participant email addresses, and both require current census data.
Prioritizing 401(k) census data benefits you and your participants
Sharing updated 401(k) plan census data with your recordkeeper allows for a safe digital experience and value-add online tools for your participants and protects you from unnecessary fiduciary risk by permitting electronic disclosures. With recordkeepers increasingly offering online census tools, updates are easy, so help yourself and your participants by making sure that your 401(k) plan’s census information is updated regularly.
The content of this document is for general information only and is believed to be accurate and reliable as of the posting date, but may be subject to change. It is not intended to provide investment, tax, plan design, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made herein.
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