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Surprised to see me in your inbox on a Thursday?! Well, here I am! 👀 This is a ✨ special edition deep dive ✨ of I Hate it Here. Every now and then you may get one of these from me! 👏 This special edition deep dive is sponsored by Betterment at Work. What's a deep dive? Deep dives are opportunities for me to collab with specific companies in the HR/People space on topics of joint interest to them, me, and even you! The sponsoring company provides invaluable input on the topic but this edition itself is written, edited, and published by your fave gal, me! Today I'm discussing why your 401(k) plan is more complicated than anyone told you, and how to actually get on top of compliance before it gets on top of you. Let's get into it!  You probably aren’t hearing this at any HR conferences, but your 401(k) plan might be creating legal exposure right now. The wildest part is that you'd have no idea until someone shows up to audit you. 😬 I know, I know, it’s not what many of us would consider the beacon of interesting topics…compliance isn’t exactly my idea of a great time either! One time, I tried to explain ERISA to a friend at a dinner party and watched her eyes go completely blank within like 30 seconds. But as you know, we work in a regulated field, and the number of HR leaders operating like that's optional genuinely keeps me up at night sometimes! For the record, I'm not here to scare you. 😇 In fact, I'm here to make 401(k) compliance a lot more digestible, because the anxiety of trying to keep up with a field that keeps changing underneath you is very real, and it's not going away! So today, I’ll be covering what's changed, what's still coming, what you should have on your calendar, and how Betterment at Work is helping HR teams build the kind of compliance infrastructure that doesn't require you to become a retirement law expert. Now buckle up, because we’re about to try and make compliance ✨ interesting ✨, and also remove the boogeyman energy it brings us all!  Every year, I like to write a newsletter for President's Day about laws that presidents have passed that directly impact people at work. And every single year, without fail, I get a flood of replies from HR folks saying that it's one of their favorite sends! Yes, we work in a regulated field. Soooo we should find interesting the things that could potentially impact our jobs and the history behind them all! And 401(k) compliance is about as interesting and relevant as it comes because lately it’s become a beast to manage!! SECURE 2.0 (the sweeping retirement legislation that passed in late 2022) introduced over 90 provisions that affect how plans are administered and reported. We're talking student loan matching, auto-enrollment mandates, expanded tax credits, and new Roth catch-up requirements. (If my friend were reading this, her eyes would totally be glazed over right now.) Some of those provisions are still rolling out, and some have deadlines your payroll team may or may not have flagged! And then there are state mandates. More states than ever are now requiring employers to offer some form of retirement benefit, each with its own slightly different rules. For example, if you manage a multi-state team, congratulations, you're now navigating a 50-state patchwork of requirements that did not exist five years ago! 🏆 Of course, I don’t think we’re expected to be 401(k) experts, and I don’t even know who has the time for that anyway. Regardless, the legislation doesn't care what your bandwidth looks like. It just keeps coming and coming, so our best line of defense is having a system we can rely on!  Many years ago, at a previous company that shall not be named, I noticed that my 401(k) contributions weren't hitting my account on the dates they were supposed to. I ended up going to the head of finance to ask what was going on, and her answer was something along the lines of "Oh, I just pay when I can." Pretty sure a record scratch sound played in my head, because holy moly! 🤯 Basically, I had to explain to the head of finance that there are legal deadlines for depositing employee contributions after they're withheld from payroll. You can’t just sit on someone's retirement money until it's convenient. That’s a federal requirement, BTW! She automated it after that convo, but the fact that it took me, an HR manager who was just annoyed and curious, to catch it? That's the problem. This type of thing is happening everywhere, too! A lot of plan sponsors genuinely don't understand their legal obligation to act in the best interest of plan participants. Their fiduciary responsibility, if you will. 🤓 They assume their provider is handling full compliance when, in reality, a lack of ongoing review of fees or data accuracy is one of the most common sources of 401(k) issues. Payroll errors cascade, and small data mistakes compound into failed compliance testing, expensive corrections, and in some cases, audits! My worst nightmare… And lemme tell ya, plan audits are a real time-vacuum that tend to uncover exactly the kind of historical errors nobody wanted to find! Betterment at Work's hidden 401(k) risks whitepaper goes deep on this if you want the full picture. It's worth a read before you assume everything's fine. Playing fast and loose with fiduciary obligations can put your company and your employees' futures on the line, even if it’s accidental. That's just the reality of administering a retirement plan in 2026!  👀 Quick question…did you know Form 5500 is due on July 31st? Are you prepared or are you expecting a nightmare scenario involving frantic emails and your brokers asking you to have legal review a bunch of stuff you’re not clear on?? The latter feels like a universal 401(k) compliance experience these days… Form 5500 is the annual report that plan sponsors file with the federal government, and it's mandatory and verryyyy detailed. Unfortunately, it also has a hard deadline that doesn't budge, even if you had other priorities in July!! 📅 Here's what to keep on your radar for the rest of the year:
If keeping track of this feels like too much, that’s because it absolutely is too much, and why does that feel like it’s by design? UGH. The 50-state guide from Betterment at Work is one of the more useful resources I've seen for making sense of the state mandate landscape. Bookmark it and reference it when you need it!  If your HR systems are outdated, every small problem starts to feel like a dragon you have to slay. You shouldn't need a sword and shield just to do your job! The right infrastructure makes compliance feel manageable. The rules will never get simpler, but doing everything manually isn’t doing you any favors. 😬 The best 401(k) plans right now are built around automation and oversight working together, which means:
Betterment at Work works with employers to build 401(k) plans designed around exactly this, so you can build a compliance infrastructure that doesn't require you to be a retirement law expert to maintain! Their Retirement Readiness Report also has data on what employees expect from their benefits today, and there’s no guesswork involved. Employees want student loan support, emergency savings options, and personalized plan design, so your plan being "technically compliant" just isn't enough anymore. The anxiety of keeping up with a field that keeps evolving is chaotic. SECURE 2.0, state mandates, payroll integration, fiduciary duty…it's a LOT. Just remember, you don’t have to know everything! You do have to know enough to ask the right questions and build systems that don't rely on someone remembering to press a button. Betterment at Work helps HR teams build 401(k) plans that are designed around compliance, with automated deposits, real payroll integration, plan design that can help reduce your testing risk, and resources like their hidden risk whitepaper and 50-state mandate guide that make this whole thing feel like you can manage it with confidence. Now's the time to ask what needs to change before next year, and if you haven't thought about any of this yet? Better that you’re doing it now than during an audit! Thanks for reading this deep dive! Reply with any thoughts you have. XOXO, Hebba Youssef | |||||||||||
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