When the Market Opens....

[Guest gsl]

We submit our payroll withholdings for a 401K Plan approx. every two weeks (bi-weekly payroll, gather files from 3 subs, proof, submit). Prices for mutual funds are invested at close of market prices.

As it turns out, we were a bit behind due to files snafu at one sub. That was fixed, I am ready to go with 3 payroll files--except market is closed. One payroll was submitted last week and will invest Monday (or whenever market opens).

In role as fiduciary, should I space out the other two payrolls over next week? Can I wait to see (1) if the markets are working okay, and (2) if the recent tragedies will skew the market?

I will (procedurally) send each payroll on a separate day as a separate transaction. (About 600 participants are involved and there are 9 mutual funds in the plan).

Gil

[Nate X]

As a fiduciary, you want to act in a prudent manner. Given the current situation of the market, I think you have a lot of leeway with your discretionary authority. You could justify this either way when deciding to deposit it all on Monday or spacing it out during the week. The bigger problem seems to be your late deposits (the number one reason for plans to be audited). You may want to make up the potential income that participant’s lost.

[Guest gsl]

Thanks for your response.

To clarify, the deposits are not "late". They are still within the 15 business day after the month of the transaction guideline, and normally within 7 to 10 days of payday. "Immediate" transfer is not practical, as some file maintenance, proofing, and tie-out is required.

[Steve72]

Nitpicking point:

The 15 business day rule is NOT a safe harbor. The deposits must be made as soon as administratively feasible. From your post, it sounds like that would be within 7-10 days, but the DOL has been known to take a harder line on this issue.

[Guest JimJ]

Back to your original question. My opinion (worth about 2 cents) deposit the money and move on. No one knows what the market will do today or next week, or next month. I do not see any advantage to hold on or space out the payrolls. I see more risk in attempting to play the market. If you were right, you were suppose to be, if you were wrong, your fired.