Embedded vs. Integrated: Know Your Retirement Plan Technology
Maintaining retirement plan compliance is a critical part of plan administration. Yet many plan sponsors increase their risk by relying on third-party integrations that create security liabilities and accountability gaps. Discover how embedded retirement and payroll services can help reduce the administrative burden.
For retirement plan sponsors, managing compliance and accuracy carries great responsibility. Even the most minor errors can result in sizeable fees, penalties and potentially, personal liability.
And the stakes are higher than ever.
According to the U.S. Department of Labor's most recent enforcement data in fiscal year 2024 alone, the Employee Benefits Security Administration recovered nearly $1.4 billion in direct payments to plans, participants and beneficiaries while closing 729 civil investigations and 177 criminal investigations.
These numbers represent real consequences for plan sponsors who fail to catch a miscalculation. That's why choosing between embedded retirement and payroll services versus a third-party integration solution is one of the most critical decisions they face.
The integration limitations of third-party solutions
Third-party integrators function as pass-through systems, which can compromise both data security and accuracy.
These solutions typically require manual set-up processes and juggling multiple vendors, each requiring separate contracts, coordination and ongoing management. They work by facilitating data movement from one provider to another without reviewing, verifying or taking responsibility for accuracy. So when issues arise, who's responsible?
Determining responsibility for errors or oversights can be a complex and time-consuming process. And resolving them often requires coordinating among multiple service providers, costing valuable time and resources, and in many cases, additional fees.
The embedded advantage
Embedded retirement services operate within a single, cohesive ecosystem where payroll and retirement plan data flow seamlessly through proprietary channels.
This real-time data transmission helps ensure that critical information — like employee deferrals, termination dates and eligibility status — updates instantly, reducing the likelihood of data discrepancies. The contained approach also decreases exposure to security breaches, as sensitive data is not transmitted across multiple platforms.
The most significant advantage of embedded retirement services? End-to-end accountability.
Unlike integrators that simply transfer data, embedded solutions review, verify and manage information, and assume responsibility for accuracy and compliance. Whether dealing with current payroll deferrals or participant-initiated investment changes, continuous verification can offer peace of mind that the data maintains these high standards.
Addressing multi-faceted compliance challenges
SECURE 2.0 introduced 90 provisions with varying implementation timelines, impacting both payroll and retirement plan administration. Successfully navigating the requirements involves proactive management and careful execution across both payroll and retirement plan functions. And as new provisions take effect, embedded systems can implement updates systematically while maintaining compliance across all areas.
Simplify your plan administration
At ADP, we help make plan sponsors' jobs easier by syncing your retirement plan and payroll data automatically, cutting down on repetitive tasks and the chance for errors.
Reach out to learn how our solutions offer the embedded security, accuracy and accountability you need to administer your plan with confidence.
ADP, Inc., and its affiliates do not offer investment, tax, or legal advice to individuals. Nothing contained in this article is intended to be, nor should be construed as, particularized advice or a recommendation or suggestion that you take or not take a particular action. Questions about how laws, regulations, guidance, your plan's provisions, or services available to participants may apply to you should be directed to your plan administrator or legal, tax or financial advisor.
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