Timing of 401(k) Deferrals

[Guest slrogers]

I know this topic has been discussed MANY times but here I go again...

I know the DOL says deposits have to be made as soon as the contributions can be segregated from the sponsors general assets. Under this guideline, I'm wondering if a two week time period is acceptable for a medium size (2000 employees) employer.

The company is on a bi-weekly payroll. Their stated goal is to remit deferrals and match prior to the following payroll. This seems to be a bit too long to me but I'm wondering what others think the DOL would say about this.

If you agree that this is too long, how should an employee approach the employer about speeding up the deposits?

Thanks for the input.

[four01kman]

It seems to me if the employer (or the employer's payroll service) can identify the amount of the payroll taxes to be remitted, they also can determine the amount of 401k deferrals at the same time. Therefore, it seems reasonable to me whatever the amount of time it takes to accomplish the first task should be the amount of time required to complete the deposit of 401k deferrals.

[JDuns]

Some of the large providers will not accept the deferrals (even into a plan holding account) until they have run certain data verification processes and can credit the deferral to each participant's account. Even though the employer can wire the paycheck to the employee's direct deposit account and remit the taxes the same day, the institutional trustee will not accept the deposit for approximately one week (after the data processes have finished).

I find this infuriating, but so long as the employer sends the money as soon as the trustee will take it, what else can they do. (Other than look for a more reasonable replacement).

[david rigby]

I was not aware that the trustee could decide what goes in the trust. Thought it was the plan administrator.

[R. Butler]

I find this infuriating, but so long as the employer sends the money as soon as the trustee will take it, what else can they do. (Other than look for a more reasonable replacement).

Could set up a separate checking account for the plan & make sure the deferrals are at least segregated from the general assets.