Pentegra :: The Importance of Good Data



by Maureen Hamblin, Senior Consultant, QPA, QKA

You've heard it before…you get out what you put in. The same holds true for employee benefit plan contribution and census data.

When you provide complete data, Pentegra can provide plan specific statistics on your 401(k) plan, automatically prepare mid-year non-discrimination testing, calculate eligibility and more accurately consult on your employee benefit plans.

Like a number of plan sponsors, you may have inherited a data file format and instructions that have been used for years. If additional data was required to be reported, you may have simply added a column or a row to capture the new data requirement. While this method works, it may not be the most efficient way to provide plan data.

Although it will take extra work to set up, redesigning your payroll contribution data files may yield significant rewards once set-up is complete. Pentegra has the ability to accept data files in your payroll provider format, in order to streamline the process.

Like most plan sponsors, you probably include the following information in your contribution file each payroll, for each participant:

  • Contribution amount(s), separated by contribution type
  • Loan payment(s)
  • Date of termination

This information is sufficient for processing contributions to your plan and you may continue to provide only this information as part of your regular payroll files. However, providing additional participant data on a payroll basis will allow Pentegra to automatically utilize this data for administration and consulting purposes. Suggested additional information to provide each payroll includes:

  • Employee email address - allows communications to be sent via email
  • Employee mailing address - ensures mailings go to the correct address
  • Employee marital status - assists with maintaining accurate beneficiary data
  • Employee date of birth
  • Employee date of hire
  • Employee date of termination
  • Pay period plan compensation - allows Pentegra to confirm contributions fall within plan limits
  • Cumulative plan compensation - assists Pentegra with year-end nondiscrimination testing; Pentegra automatically prepares mid-year nondiscrimination testing for those clients who provide compensation information in their payroll files.
  • Deferral percentage (separated by type) - allows Pentegra to confirm contribution amounts
  • Discretionary contribution amounts - allows Pentegra to confirm appropriate contribution amounts
  • Pay period hours - allows Pentegra to accurately maintain participant vesting information
  • Cumulative hours - allows Pentegra to accurately reflect participant vesting
  • Information on newly hired employees - these participants will be added to plan records as ineligible employees; having the data on these participants will assist in plan testing and automatic enrollment determinations

Once you decide to begin the process to update your contribution file format, you must notify your Pentegra Account Representative that you intend to change your file format. Your Account Representative and Plan Consultant will work with you throughout the file redesign process. A sample contribution file format can be found on your Plan Sponsor website, under the Administration tab, File Uploads, Sample Contribution File link (located at the bottom of the page). Since each plan's contribution processing is highly customized based on its payroll file, please do not begin using a new file format until you have worked through the process and your Account Representative gives the green light to begin using the new file format.

In addition to providing complete information on a payroll basis for your contribution files, providing complete information on the year-end census file is beneficial as well. This includes:

  • Reporting complete information on all employees, whether to not they are eligible for plan participation, allows Pentegra to more accurately complete non-discrimination testing
  • Reporting compensation paid during a testing year for all employees, regardless of whether they terminated during the year allows Pentegra to more accurately complete non-discrimination testing
  • Reporting termination dates, even if a participant terminated in a prior plan year, allows Pentegra to utilize the most up to date information for testing
  • Each employee must have a Social Security Number included in the file, in the same format within each cell
  • Reporting partial-year Box 1 W-2 compensation will allow Pentegra to more accurately complete non-discrimination testing
  • Reporting Section 125 and 132 deferrals will allow Pentegra to more accurately complete non-discrimination testing
  • Reporting Officer Status will assist Pentegra in Top Heavy testing Reporting change in status, exclusions, related employees will assist Pentegra in completing non-discrimination testing
  • Reporting any incorrect participant information when realized will allow Pentegra to maintain more accurate records

Your Account Representative, Compliance Analyst and Consultant are available to assist you with any data issues or questions you may have on providing additional participant data.