October 16, 2026
Benefits of payroll integration for TPAs and their clients
When choosing a retirement plan platform, employers often look for one that not only provides quality investment choices, plan design and service, but also offers features that can help simplify plan administration.
Enter payroll integration.
By creating a direct connection between a plan sponsor’s payroll provider and their retirement plan platform, payroll integration allows participants' payroll information to move digitally and securely between systems. The result is that third-party administrators (TPAs) and plan providers can spend less time on payroll administrative tasks and focus more time on providing support and services to their plan sponsor clients and the plan participants they serve.
Benefits of a well-connected experience
When payroll and recordkeeping are connected, TPAs can effectively reduce the amount of time and resources spent on collecting payroll data, validating data, reconciling discrepancies and researching errors. Rather than spending time on these manual or repetitive tasks, payroll integration can help allow TPAs to focus on other areas of their business, including offering better strategic conversations and customer service to their clients.
Potential benefits of payroll integration to plan sponsors and TPAs
| Feature | Benefit to sponsors | Benefit to TPAs |
|---|---|---|
| Automated data exchange | Less manual file preparation and uploading | Less time collecting and processing payroll files |
| Connected payroll and plan data | Fewer data-entry errors and corrections | Cleaner data for administration and compliance testing |
| Simplified administration | Less work for HR and payroll teams; reduced risk of late or incorrect deferrals | More time for consulting and client service; fewer contribution correction issues |
| Scalable technology | A more modern, connected plan experience | Ability to serve more plans efficiently |
Capital Group makes payroll integration available in both its RecordkeeperDirect® and PlanPremier®-TPA 401(k) platforms. A broad range of payroll providers and third-party aggregators, including many of the industry’s most widely used platforms connect directly to Capital Group’s robust payroll integration systems. See:
Capital Group offers two levels of payroll integration with its solutions:
180° payroll integration
Payroll data is transmitted directly from the payroll provider to the recordkeeping system. The plan sponsor reviews and approves the information before it is processed. Participant-directed changes, such as deferral updates, are reported to the plan sponsor. The plan sponsor will need to coordinate with their payroll provider to implement any changes.
360° payroll integration
This option extends the connection to a bidirectional or, two-way, flow of data. In addition to receiving payroll data, the recordkeeping platform communicates participant deferral changes, loan information and certain census updates directly back to the payroll provider, eliminating administrative work for the employer.
TPAs and financial professionals can help plan sponsors understand the potential cost savings of using a retirement platform that offers payroll integration. While payroll service providers may charge a base and monthly fee for their services, there is no additional charge for the payroll integration services offered on Capital Group’s retirement plan platforms.
The labor associated with manually preparing and uploading payroll files can also represent a meaningful administrative cost for plan sponsors. Consider this hypothetical scenario for a small business that maintains a biweekly payroll. Adding payroll integration would potentially eliminate 26 manual uploads each year:
Assuming the company spends 30 minutes each pay period for uploads, the company would save 13 hours of work each year. At a loaded labor cost of $40/hour, that would translate into a $520 savings in estimated annual labor value.
Assuming the company spends an hour each pay period, that would be 26 hours saved. At a loaded labor cost of $40/hour, that would translate into a $1,040 savings in estimated annual labor value.
Actual time savings will vary based on a plan sponsor's processes and responsibilities. Plan sponsors generally remain responsible for reviewing and approving payroll information before it is processed. If manual and repetitive work take even longer each pay period, clients could quickly see the value of payroll integration. The biggest benefit, of course, may be a happier plan sponsor client.
To learn more about payroll integration with RecordkeeperDirect call us at (800) 421-6019 and for PlanPremier-TPA call us at 877-872-5159.