A 401(k) and a 403(b) are both employer sponsored retirement plans that allow employees to save for retirement through payroll deductions with tax advantages. The main difference is who can offer them.

• 401(k) plans are typically offered by for-profit employers.
• 403(b) plans are offered by nonprofit organizations, schools, and certain public sector employers.

Both plan types work in similar ways: employees can contribute pretax or Roth dollars, investments can grow tax advantaged, and employers may choose to offer matching or other contributions. Contribution limits and withdrawal rules are generally the same, though some plan features and administrative requirements can differ based on plan type and employer.

Traditional 401(k) contributions are made pretax, which lowers taxable income today. Roth contributions are made after tax, allowing qualified withdrawals to be tax free in retirement. Employees can choose the option that best fits their financial goals, and many plans allow a mix of both.

Offering a retirement plan helps employers support employees’ financial futures while delivering real business value.

Key benefits include:

• Attracting and retaining talent: Retirement benefits are a core part of a competitive total rewards package and can help improve employee satisfaction and retention.
• Tax advantages: Employer contributions are generally tax‑deductible, and businesses may be eligible for tax credits when starting a plan.
• Easier saving for employees: Payroll‑based contributions make it simple for employees to save consistently, helping them build long‑term financial security.
• Stronger engagement: Supporting employees’ financial well‑being can lead to a more engaged, stable workforce.

Overall, a retirement plan is a meaningful way to invest in employees while strengthening the business.

IIntegrated retirement solutions connect payroll and a third‑party retirement provider so data can move between systems. While this reduces some manual work, retirement typically lives outside the HCM, often requiring separate logins and workflows.

An embedded retirement solution is built directly into the HCM platform. With Paylocity Retirement powered by Vestwell, retirement is part of the Paylocity experience and connected to payroll, which serves as the system of record. This connects payroll and retirement through a single system of record and centralizes workflows for both admins and employees.

Switching is easier than most employers expect. Paylocity guides you through the entire transition — from reviewing your current plan to coordinating next steps — so you always know what’s happening and what’s needed. With payroll and retirement connected in one place, we help ensure your new setup is seamless, while Vestwell handles the retirement plan details behind the scenes. It’s a streamlined, fully supported experience designed to reduce the lift for HR while improving how your plan runs day to day.

Paylocity Retirement is built directly into the Paylocity platform, so payroll and retirement operate as one connected system — not separate tools.

Payroll serves as the single source of truth. When payroll runs, retirement contributions automatically update based on the most current employee data — without manual file uploads, batch processing, or reconciliation. This keeps deductions, eligibility, and contribution changes continuously aligned.

Because retirement is embedded in Paylocity:

• Retirement data stays continuously in sync with payroll
• Contribution changes automatically update with each payroll run
• Admins and employees manage retirement directly within Paylocity

The result is more accurate data, fewer errors, and a simpler day-to-day experience for everyone.

Traditional retirement integrations typically connect two separate systems using one-way or scheduled data transfers. These approaches often require manual file handling, introduce delays, and increase the risk of data inconsistencies.

Paylocity Retirement powered by Vestwell takes a different approach. Instead of integrating retirement into payroll alone, retirement is embedded directly into the entire Paylocity experience. That means payroll and retirement are designed to work together — without disconnected workflows.

With an embedded model:

• Payroll and retirement stay aligned automatically.
• Manual reconciliation and duplicate workflows are eliminated.
• Employees access and manage retirement within the same platform they use every day.

By embedding retirement, Paylocity delivers a more accurate, reliable, and streamlined experience — going beyond what a standard retirement integration can offer.

Paylocity Retirement is powered by Vestwell, combining Paylocity’s unified HCM platform with Vestwell’s regulated retirement expertise.

In this partnership:

• Vestwell serves as the retirement plan administrator and recordkeeper, using Paylocity payroll data to operate the plan
• Vestwell holds defined fiduciary responsibilities, based on the plan agreement and required licensing
• Employers remain the plan sponsor and maintain plan oversight
• Paylocity delivers the embedded experience, connecting payroll, contributions, and retirement access directly within the Paylocity platform

This model brings together Vestwell’s retirement administration and fiduciary capabilities with Paylocity’s HCM platform — giving employers and employees a streamlined way to manage retirement directly within Paylocity.