Bundling sounds so convenient, doesn’t it? One login, one service team, one bill. It’s the Netflix of plan administration — until the compliance season arrives and the algorithm starts buffering.
Payroll companies love to sell the dream: “We can handle your 401(k) too!” It’s a compelling pitch for small employers who are tired of juggling vendors. The problem is, most payroll companies know as much about ERISA as I know about hair care. Once the integration gets messy — late deposits, missing census data, wrong deferral codes — the client realizes the hard way that convenience doesn’t equal competence.
I’ve seen it countless times: a plan sponsor calls, furious because the DOL is investigating late contributions, and the payroll provider blames “a system glitch.” Translation: “We didn’t know what we were doing.” The truth is, payroll integration is hard. Payroll systems weren’t built to interpret plan eligibility, match formulas, or vesting schedules. They were built to cut checks.
Providers like to joke that when payroll gets into the 401(k) business, it’s like a toddler getting into a toolbox — something’s getting broken. And when it does, guess who gets called to fix it? You — the independent TPA or plan consultant who knows how the machinery actually works.
Bundling will always have its place, but don’t confuse it with expertise. A good provider partnership doesn’t start with “we do it all.” It starts with “we do this part well.” Because in this industry, the best plans aren’t the ones with the fewest vendors — they’re the ones where every vendor knows their lane and stays in it.
