Paychex 401K Review: Is it the right option?

By Altay Gursel | February 22, 2021
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Paychex 401K Review: All That To Know About


Company Background

Paychex Inc. is a retirement, human resource, benefits, and payroll outsourcing firm. Paychex, as a foremost retirement service provider, helps businesses give their employees a dignifying retirement through excellent services.

One striking feature they possess is the fact that they provide an integrated retirement plan for small-sized businesses. It is this special quality that distinguishes them from the other employee retirement plans.

Below is a list of the remarkable features and offers which Paychex delivers to you.

Features of Paychex 401 (k) Plan

1. Customized 401(k) Plan

It is indeed amazing that Paychex lets you customize your 401(k) or other plans in a way that is suitable for your company.

They are aware of the peculiarity of each establishment, and their needs, especially the small-sized ones. Therefore, they don’t just slap you with their demands and unbending rules. Paychex sits and works hand in hand with you in coming out with a structure for your 401(k).

Now, here is the icing on the cake. They dutifully offer guidance through retirement planning pioneer, Guided Choice®.

2. Third-Party Administrator Services

Again, Paychex is not lax or passive with their 401(k) plan, leaving the show to only the employer, the employee(s), or other stakeholders.

Not at all.

They are firmly on the front seat, serving as a third-party administrator. Thus, they create and manage records of diverse sorts; they screen and register applicants.

They also help employees to process their loans when required, including obtaining the form 5500 for IRS. Of course, the processing of these things as part of their 401(k) services accrues some benefits to you.

For instance, your expenses and charges in consulting the concerned agents have been cut. Again, there is the advantage of time and quality reports.

3. Payroll Integration

Hey, let’s not pretend this is not there. Most people know that payroll integration is a foregrounded emblem of Paychex.

Hence, if they are already your payroll processor, they can directly integrate your 401(k) retirement plan and payroll. If not for all, definitely for small-sized businesses, this is very good.

Did you ask why?

Well, since these small companies often do not have enough staff members who know how to manage retirement plans, then engaging your payroll vendor (Paychex) in administering your company’s 401(k) retirement plan is perfect.

This way, you gain the benefit of expertise, technology, and reliability while streamlining the tasks associated with both functions.

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4. Open Access to Your 401(k) Plan

Yes, you heard that right. Paychex grants their clients – employers and employees alike express access to their accounts.

In other words, through the use of their site and app, participants far and near are privy to information about their 401(k) plans.

Given the Internet facilities, participants have access to the investment their company subscribes to, their account information, and the likes.

And through this, the participants can more consciously maximize their contributions towards the 401(k), and make other rational decisions that can increase their profit margins in the long run.

This is a feat that otherwise might not have been realized if the participants were left in the dark.

5. Myriads of Investment Options

At this juncture, it behooves we dwell a little more on investment since we mentioned it in the previous point.

Paychex is open to a broad range of investments. The investment options include model portfolios, target-date funds, preselected line-ups, and broker-specific rosters from Ameriprise, Edward Jones, Merrill Lynch, and Morgan Stanley.

Consequently, this means that there are higher chances to pick more sumptuous investment deals for your retirement plans, and perhaps, to increase the annual return rate. Tell me you like that.

6. Relating with IRS:

To meet the ERISA reporting requirement, one of the requirements for a 401(k) plan is the filing of Form 5500 annually with the IRS.

This form is purposed to provide information intricate with the 401(k) plan to the Federal government and the plan participants.

The larger the 401(k) plan, the more details are required to be provided. Paychex is very swift in picking up this responsibility annually for you if you’ve got 401(k) or any other retirement plans with them.

They prepare the form for you and send it to the appropriate quarters as soon as possible. Would you not like things done for you this way?

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Sophisticated Support System: Paychex is not like any other company out there that provides retirement services. They are always a step ahead. They seek to have a great relationship with you by offering clients’ satisfaction.

Worthy mention has been made of the use of their site (live chats and emails) and mobile app. However, their support system transcends that.

Paychex has an established and comprehensive business continuity plan, which allows them to rapidly respond to the continually changing needs of businesses and employees. This is why they have been committed to helping companies to navigate the impacts of COVID – 19.

Even with the pandemic going on in the whole world right now, which has thrown most businesses off-balance, efforts are continually being made by Paychex to build your service experience business as usual.

Take, for example, presently, did you know that Paychex remains the only company in their industry providing access to their specialists? Seven days a week, 24 hours a day, and 365 days a year, by phone or through chat, you can reach them.

👎 Notable Inadequacies of Paychex 401(k) Plan

With the numerous points provided, you have now begun to contemplate the effectiveness of Paychex as a perfect plan to adopt for your retirement.

Nevertheless, hold on.

You need to take a step back and have another look at the idea. For no one is without their handicap. Let us substantial these claims.

From feedbacks and comments by participants, there is a couple of goings-on to be wary of using Paychex.

Yes, there are what you can call a red flag here!

According to the report collated by ConsumerAffairs, a sizable percentage of participants of the Paychex 401(k) plan are having different challenges with the company.

Problems that are worthy of note! These challenges range from reports on multiple tax reporting errors’ issues; to implementation of discouraging policies that adversely affect participants’ businesses; to erratic delivery of payroll, and others.

I am sure you want to take a close look at this.  So, let’s objectively reflect on three of these issues that seem to be a general concern.

1. Pricing Information

Paychex uses a website and an app (including live chats and emails). Still, there are vital pieces of information that are not readily available to participants on these platforms. At least, not straight away, unlike some of the 401(k) competitors.

No info or evaluations are provided on what types of fees the company charges on the site and app. The website does not provide the 401(k) plan fees; neither does it offer other related expenses such as setup fees, monthly fees, investment management fees, and plan termination fees.

When you call the company or reach out to chat online, representatives can’t provide this information. The easy way, perhaps, is to reach out to their local representatives.

2. Reduced Representatives’ Responses

Some participants have reported thatPaychex’s representatives haven’t been at their best, even recently.

Emails and calls are left unanswered, requests are redirected or dropped abruptly, and when they answer, comments are rude and abrasive, quite uncharacteristic of a company’s representatives.

Well, these claims may be hyped beyond normal. But then, does the apple ever fall far from the tree?

3. Undue Deduction of Clients’ Money

No one likes their money taken from their bank account, especially without a tenable explanation.

Well, participants have laid claims that the company deducted bizarre fees from their accounts without accountability, even after the said participants moved to another company.

At this juncture, you might want to peruse all the themes raised so far. Place it on the table. Look at the pros and cons. And make your decision.

Don’t be surprised the drawbacks can be very relative to those concerned. 

4. No aggregation between Paychex 401k with portfolio analyzers.

There is one missing element Paychex 401k fails to deliver. There is no way to aggregate Paychex 401k data with a portfolio analyzer like Quicken or Personal Capital etc.

This can be a problem for those who want to have a holistic view of all their retirement accounts under one roof. That includes rollover IRAs, banks, retail investments, and 401k accounts. Unfortunately, Paychex offers no way to do this.

Since Paychex cannot be plugged into something like Quicken the 401k data cannot be imported into Quicken completely. Paychex allows an export but it is and limited by the extent of the current year’s worth of information only. If you have many years of data, a partial export is pretty much worthless.