Author Topic: Employer 401k Delay?  (Read 9627 times)

JGB

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Employer 401k Delay?
« on: August 26, 2014, 12:09:56 PM »
Prior to switching to my current company and qualifying for their 401k plan as of August 1, the last time I was employeed with a company who had a retirement plan was in 2011, and I started with them all the way back in 2004. So I have no idea what kind of delay, if any, I saw when those paychecks & deductions started. But things with the current employer strike me as odd...

Starting August 1, 18% of my pay is going to the 401k. We are paid every two weeks. I have been checking the 401k every work day (TRowePrice includes a note about the 'as of' date of the balance and it only updates during the week). Yesterday afternoon was the first time it actually reflected my deposit amount.

Here's our pay schedule:
  • July 31: direct deposit for August 1 pay check hits the bank. No 401k deduction was made.
  • August 2: receive pay stub (by mail, which is another WTF?, but I digress) reflecting no 401k deductions
  • August 14: direct deposit for August 15 check hits the bank. Correct 18% deduction is reflected in the amount.
  • August 16: receive pay stub reflecting 18% 401k deduction
  • August 25: 401k deposit is first seen in T. Rowe Price account

A full eleven days between when it was withheld from my check and when it made it into my account. Is this typical? It seems fairly minor, but when expounded across a year's pay, that represents an expected return of $50 to $75 that I would miss purely due to delays in my money hitting my account.

My employer is a large, global corporation, so I do not expect that they are doing anything technically illegal here. But it strikes me as very odd to say the least. And if they are making $25 per year per employee (since my amount is clearly on the high end of what people would deduct), we're talking about $1.5M in interest/earnings that they get instead of the employees.

Am I off my rocker to be concerned about this? Is a delay like this normal?

sheepstache

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Re: Employer 401k Delay?
« Reply #1 on: August 26, 2014, 12:19:08 PM »
Silly question, but is the date you see it in the T Rowe account also the post date?  Sometimes it takes a couple days after payday for my deposit to show up in 401k but the account is credited for the date after payday.

Frankies Girl

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Re: Employer 401k Delay?
« Reply #2 on: August 26, 2014, 12:21:40 PM »
Just my experience, but no, not normal. I used to have the deduction taken out the same time as they sent the notification for direct deposit, and the contribution went in the same day. In the last year, it's started sliding - deduction taken same as always, but doesn't hit my 401K until 3-5 days later. I called my financial company to ask what was going on, and they said it was my company delaying the contributions; they put them in the same day received as long as it's a few hours before closing time. Still need to ask my 401k manager what is happening but I was told that we have a new(ish) payroll person and she isn't really on the ball.

Couldn't hurt to ask your company's manager why the deductions are delayed that much; at the very least, you'll let them know that some people are paying attention.

Beric01

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Re: Employer 401k Delay?
« Reply #3 on: August 26, 2014, 12:21:56 PM »
Prior to switching to my current company and qualifying for their 401k plan as of August 1, the last time I was employeed with a company who had a retirement plan was in 2011, and I started with them all the way back in 2004. So I have no idea what kind of delay, if any, I saw when those paychecks & deductions started. But things with the current employer strike me as odd...

Starting August 1, 18% of my pay is going to the 401k. We are paid every two weeks. I have been checking the 401k every work day (TRowePrice includes a note about the 'as of' date of the balance and it only updates during the week). Yesterday afternoon was the first time it actually reflected my deposit amount.

Here's our pay schedule:
  • July 31: direct deposit for August 1 pay check hits the bank. No 401k deduction was made.
  • August 2: receive pay stub (by mail, which is another WTF?, but I digress) reflecting no 401k deductions
  • August 14: direct deposit for August 15 check hits the bank. Correct 18% deduction is reflected in the amount.
  • August 16: receive pay stub reflecting 18% 401k deduction
  • August 25: 401k deposit is first seen in T. Rowe Price account

A full eleven days between when it was withheld from my check and when it made it into my account. Is this typical? It seems fairly minor, but when expounded across a year's pay, that represents an expected return of $50 to $75 that I would miss purely due to delays in my money hitting my account.

My employer is a large, global corporation, so I do not expect that they are doing anything technically illegal here. But it strikes me as very odd to say the least. And if they are making $25 per year per employee (since my amount is clearly on the high end of what people would deduct), we're talking about $1.5M in interest/earnings that they get instead of the employees.

Am I off my rocker to be concerned about this? Is a delay like this normal?

That is pretty odd. I, like you, work for a large global corporation, and I get my 401k deposits on the day of my scheduled pay date, and my actual direct deposit one day earlier than the scheduled pay date. My company also uses T. Rowe Price. Could it be just because this is your first time contributing to the plan and there were processing issues? If not, this is definitely an issue and I'd speak to your payroll department - I wouldn't want to miss out on any potential returns, and no, you're not crazy for not wanting to either.

Calvawt

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Re: Employer 401k Delay?
« Reply #4 on: August 26, 2014, 12:42:24 PM »
There are rules around it, but I think it might be like 30 days before there is any penalty.  We did pay interest penalties when there was a delay for a couple of people in the last year.

My payroll manager would know, but I am away at lunch.


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Cheddar Stacker

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Re: Employer 401k Delay?
« Reply #5 on: August 26, 2014, 12:50:48 PM »
The ERISA compliance rule is somewhere in the 7-10 day range, but I'm unsure if that's business days or just days.

My work takes 4-5 days. It could be your employer, but if you have a payroll service it could also be their issue. Most payroll companies just draw one or two huge transfers from the company bank account to cover everything, then they have a limited time to send the money where it's supposed to go.

schimt

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Re: Employer 401k Delay?
« Reply #6 on: August 26, 2014, 01:41:57 PM »
My contribution to my 401K seems to hit around 5 business days after i receive the rest of my pay check. I have been meaning to inquire about this as well. My 401K is managed by fidelity.

AH013

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Re: Employer 401k Delay?
« Reply #7 on: August 26, 2014, 01:45:57 PM »
Not all that odd and completely in line with ERISA requirements.

Direct deposits, while cheap, are still more expensive than $0.  Because of this, a lot of companies that pay twice a month or bi-weekly will lump together the 401k deductions from say the 15th & 31st plus the combined employer match (if offered) into a single 401k contribution to the plan.  It's not so much to earn a float off your money, as it is to avoid excessive plan fees.


FIreDrill

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Re: Employer 401k Delay?
« Reply #8 on: August 26, 2014, 01:50:37 PM »
My Wife's hit about 5 business days after hey paycheck and mine hit about 7-10 business days after my paycheck.  It is a little annoying at times.....

Jessa

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Re: Employer 401k Delay?
« Reply #9 on: August 26, 2014, 07:33:51 PM »
The length of time between when it is taken out and when it hits the 401k account has to do with how your company processes it. My current company, our pay hits on Friday, but the 401k deduction doesn't go through until Monday. I didn't check yesterday, but I know the balance today is reflective of my 8/22 deduction.

My last company, a manual wire was done. So the payroll would be finished Wednesday and the paperwork sent from HR to accounting on Thursday. Then it would depend on how soon the A/P clerk got the paperwork together (SHOULD only take 5 minutes, didn't always), and how quickly all the necessary sign offs and approvals could be acquired in order to do the manual wire. After a kerfluffle with some fines, the approvers got better about signing off on those pretty quickly, but it still sometimes took several days.

Do you know if your payroll is handled out of a major corporate office? If it's all centralized, I'd be surprised to find they are this inefficient. If the payroll is done on a more local level, it may just be the same thing I had with my last company, the process is manual and dependent on numerous individuals which creates unnecessary delay.

JGB

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Re: Employer 401k Delay?
« Reply #10 on: August 27, 2014, 07:49:44 AM »
Do you know if your payroll is handled out of a major corporate office? If it's all centralized, I'd be surprised to find they are this inefficient. If the payroll is done on a more local level, it may just be the same thing I had with my last company, the process is manual and dependent on numerous individuals which creates unnecessary delay.

It's definitely not out of the local office. Could be a national US office, or a regional North-American office. Unlikely, but possible that it's even at a higher level than that...

wtjbatman

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Re: Employer 401k Delay?
« Reply #11 on: August 27, 2014, 07:56:15 AM »
With my previous employer, where my 401k was managed by another company (Wells Fargo), there was approx a one week delay. So for example, I'd get my paycheck showing my 401k contribution on August 1st. I wouldn't see the contribution in my 401k account until the next Friday, August 8th. Do I think my employer was hanging on to my money for some sort of minor monetary gain? Who knows, but once I understood the delay, I stopped sweating it. This is like the guy who was upset at his wife for wanting to spend $15 on a book of checks just because he doesn't use them. Huh?

At my new job I started 6 weeks ago, where my 401k is managed by the same company I work for, I see the contribution in my account the same day I am paid. Other than some minor gratification of seeing my 401k balance rise, there is no real difference between the delay from my previous employer and the instant contribution I see now. What does a week matter when this is money I won't be touching for 20 years?

Melf

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Re: Employer 401k Delay?
« Reply #12 on: August 27, 2014, 08:19:31 AM »
I'm paid bi-weekly and my direct deposits to checking and savings accounts normally post on Thursday and Friday respectively.  My 401K contributions generally post on the following Monday so I guess that's better than most.  The 401K is currently managed by Wells Fargo.


clarkm04

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Re: Employer 401k Delay?
« Reply #13 on: August 27, 2014, 10:42:39 AM »
Don't even get me started on this topic.

I'm paid biweekly (26 total paychecks; 24 of the 26 get payroll deductions for 401k, health care, etc).

The first paycheck is typically around the 1st through 10th.  Deductions occur.

The second paycheck comes out the the last week or so with a contribution coming out.  All the money is posted 2-3 days after the second contribution goes in.....WTF!

For instance, August:
1st Paycheck with payroll deduction: Friday 8/8
2nd Paycheck with payroll deduction: Friday 8/22

Money for August posted into 401k account Monday 8/25

Thus from the 1st paycheck, there is a 17 day delay from the deduction to posting into the account.

I see this as bullshit, so I've talked to our HR director directly since our company has around 150 employees.

Our HR person is a witch, so her answer to why this occurs doesn't make sense.

I've asked if I could get payroll deductions on all 26 paychecks since it's possible to contribute more.  Answer: No.
Can we change to get paid monthly or twice a month, again easier to contribute more money for budgeting reasons.  Answer: No.
Can I just have my 401k deductions from my second paycheck, to avoid the lag.  Answer: No.

Anyway, I'm waiting for her to retire and get someone who isn't witchy and might be willing to change some things, but for now I typically lose money since the market typically up than down.



neo von retorch

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Re: Employer 401k Delay?
« Reply #14 on: August 27, 2014, 10:48:50 AM »
At my last job, the office manager would "process IRA contributions every 6-8 weeks", all at once. I always thought it was a little shady and wondered if it was breaking any laws. That and they would deposit paychecks "3-7" days after the 1st and 15th each month. You could never really reliably predict anything!

Lis

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Re: Employer 401k Delay?
« Reply #15 on: August 27, 2014, 11:03:45 AM »
I'm at my first job with a 401k, and my contributions always hit 5 business days after payday, which is the 15th and last of every month. So if I'm paid on Tuesday the 15th, my 401k contributions will hit on Monday the 21st. This payday, since the last of the month is a Sunday, I'll be paid this Friday the 29th, which means my contributions will hit Thursday 9/4.

We use Fidelity, and our payroll is outsourced. I always just assumed there was some delay between my employer, payroll, and Fidelity. Nothing shady here as far as I can tell.