Employer-sponsored retirement account question

[Noah930]

Seeking the experience of the PPOT brotherhood here. How long does it take to fund an employer-sponsored retirement account? How long does it take for money to get from my employer to my retirement account?

I understand there are a bunch of dates floating around. For example, a pay period can go from November 22nd until December 5th. The employer cuts a paycheck on December 10th. Normally with direct deposit, I am used to getting that paycheck in my bank account on December 11th. It's electronic and set up well in advance, after all. It should be fairly quick (one day), right?

But how long should it take for withheld funds (from the paycheck) to get into my employer-sponsored retirement account? About the same time/one day? A couple days? Two weeks? Is there any sort of standard expectation for a reasonable timeframe? Should I expect funds to be recorded by the retirement fund administrator on December 11th also? Or something later, like the 29th of the month?

I'm trying to figure something out with Mrs. Noah's fund. I realize that in the grand scheme of things, a week here and a week there don't make a big investing difference over the long haul. But I'm trying to do some forensic accounting, and the inconsistent delays are making this more difficult. Talking with HR people is, as usual, useless.

[reachme]

I looked into this at one point and there is a lot of discretion as to how long it takes for withdrawls to make it to your account, and this is for a reason. I read where payroll processing is basically a freebie service in return for also handling the retirement accounts. That means the processor needs to get their money somehow.
So floating everyones comtributions for a few days/weeks/months is part of delay as is likely kickbacks from fund managers for only offering their selection of funds for retirement. What could/should happen in seconds to a day (end of trading day) for it to show in your account is not well regulated

[masraum]

Originally Posted by Noah930

Seeking the experience of the PPOT brotherhood here. How long does it take to fund an employer-sponsored retirement account? How long does it take for money to get from my employer to my retirement account?

I understand there are a bunch of dates floating around. For example, a pay period can go from November 22nd until December 5th. The employer cuts a paycheck on December 10th. Normally with direct deposit, I am used to getting that paycheck in my bank account on December 11th. It's electronic and set up well in advance, after all. It should be fairly quick (one day), right?

But how long should it take for withheld funds (from the paycheck) to get into my employer-sponsored retirement account? About the same time/one day? A couple days? Two weeks? Is there any sort of standard expectation for a reasonable timeframe? Should I expect funds to be recorded by the retirement fund administrator on December 11th also? Or something later, like the 29th of the month?

I'm trying to figure something out with Mrs. Noah's fund. I realize that in the grand scheme of things, a week here and a week there don't make a big investing difference over the long haul. But I'm trying to do some forensic accounting, and the inconsistent delays are making this more difficult. Talking with HR people is, as usual, useless.

If you're talking about something like pre-tax employee contributions getting deposited, then I would expect it to be pretty fast, nearly as fast as the direct deposit or at the very least, at a regular interval, but then I've always worked for large enough companies that it was all automatic and fast.

Or are you wondering about employer matching contributions?

[Noah930]

Or are you wondering about employer matching contributions?

pre-tax employee contribution
the bit that gets deducted from the paycheck

We made a change in December. I certainly see the changes in the paycheck amounts direct-deposited into our bank/checking accounts. But I don't see the changes in contributions reflected in the retirement account. Well, I see them, but I'm not sure which contributions are from which paychecks. And no one in HR or the fund managing company has any idea, either.

[Sooner or later]

I dug into this years ago. Don't know if it has changed.

They must deposit the money into an account no later than 15 business days after the end of the month in which the money was deducted from your check

[masraum]

Originally Posted by Noah930

pre-tax employee contribution
the bit that gets deducted from the paycheck

We made a change in December. I certainly see the changes in the paycheck amounts direct-deposited into our bank/checking accounts. But I don't see the changes in contributions reflected in the retirement account. Well, I see them, but I'm not sure which contributions are from which paychecks. And no one in HR or the fund managing company has any idea, either.

That's really weird. If my check says something like "Pre-tax 401k deduction $100", then I would expect the website for my 401k to say "deposit $100", and it should be pretty inline with my check deposits.

Since the pretax should be a pretty steady amount and steady timing, I would expect that pattern to be easy to find in the statement for the 401k.

Good luck. Hopefully, it's just hard to find/see/spot.

[Noah930]

Originally Posted by masraum

Since the pretax should be a pretty steady amount and steady timing, I would expect that pattern to be easy to find in the statement for the 401k.

That's the non-sequitur, which I'm trying to figure out.

Originally Posted by Sooner or later

I dug into this years ago. Don't know if it has changed.

They must deposit the money into an account no later than 15 business days after the end of the month in which the money was deducted from your check

That's helpful. So the fund company may be maximizing that 15-day period sometimes, while processing stuff faster than 15 days at other times.

The conspiracy theorist in me then wonders, what's that money doing in the meantime? A couple hundred bucks here and there aren't worth it, but it you had access to thousands (or tens of thousands) of employee contributions, and had free reign with them for 10-15 days at a time, you could use it to invest for yourself....

[Sooner or later]

Originally Posted by Noah930

That's the non-sequitur, which I'm trying to figure out.



That's helpful. So the fund company may be maximizing that 15-day period sometimes, while processing stuff faster than 15 days at other times.

The conspiracy theorist in me then wonders, what's that money doing in the meantime? A couple hundred bucks here and there aren't worth it, but it you had access to thousands (or tens of thousands) of employee contributions, and had free reign with them for 10-15 days at a time, you could use it to invest for yourself....

Back then it wasn't just 15 days.

You get paid on Feb 1st. They had a max time to deposit 15 business days into March.

That was the max allowable time.

[masraum]

Originally Posted by Noah930

That's the non-sequitur, which I'm trying to figure out.



That's helpful. So the fund company may be maximizing that 15-day period sometimes, while processing stuff faster than 15 days at other times.

The conspiracy theorist in me then wonders, what's that money doing in the meantime? A couple hundred bucks here and there aren't worth it, but it you had access to thousands (or tens of thousands) of employee contributions, and had free reign with them for 10-15 days at a time, you could use it to invest for yourself....

Yep. I don't really wonder about that at all.

Or, imagine this scenario (that absolutely happens), company says "we'll match 100% up to 5% in 401k. You work year X. If you are still an employee in Feb of year X+1, that's when we'll deposit all of the matching funds. If you leave the company before the matching is deposited, you forfeit the matching." Granted, your own money shows up in a timely manner. It's just their matching that is held for a year.

So, weird timing would be irritating, but it could be worse.

[MBAtarga]

When I looked into this - it seemed Fidelity got my 401k withheld funds within 5-7 days of when I got my direct deposited check. Company match contributes at the same time (funds are merged.) Seemed reasonable to me.

[Groesbeck Hurricane]

The managing firm is maximizing the float on your money. They will move it as it best fits their investment portfolio strategies.

Best thing is when you have a company funded retirement plan that the company puts the minimum legal amount into every year. I am fully vested in one, they have yet to fully fund the part I am vested in. That makes for fun retirement planning, expect zero of my $XXX a month.

[imaircooled]

If our payday is on a Friday....say 1/15/2021 then the 401K deductions are posted to employee accounts usually the next Monday.....1/19/2021 because of the Holiday on 1/18...for this pay period.

[Noah930]

I've gone back to try to match paycheck dates to 403b contributions over the past year, and it looks like it takes about 15 days after a paycheck, to deposit the deduction (and matching employer funds) into her retirement account. Sometimes it's as short as 11 days--sometimes up to 21 days. But it seems to be around 15 days on average. Pay period ends on a Saturday, paycheck gets cut the following Thursday, money gets deposited into the retirement account 15 days later on a Friday. I don't understand why it takes 2 weeks, and no one Mrs. Noah's asked seems to know (or care) either.

Curious, I looked up my situation. 4 days. It's always just 4 days. From paycheck to contribution into my 401k.

[KFC911]

Originally Posted by Groesbeck Hurricane

The managing firm is maximizing the float on your money. They will move it as it best fits their investment portfolio strategies.
....

This would be my guess also. When BIG $$$ are being moved around (banks, corporations, Federal Reserve), even hours matter .... because BIG $ add up .

Even itty bitty chunks like eleventy hundred million start to add up.

A penny saved ... but on steroids

I used to watch $50 Billion worth of "Bit Dollar" transactions every day .... and those were small 'taters

[Noah930]

I think you're right, KC (and Groesbeck). This company, Wespac, is totally taking advantage of the situation.

We recently made a big change in Mrs. Noah's deductions/contributions. She had a pay period that ended last week, and the paycheck was issued 2 days ago. It was electronically deposited in our bank account yesterday. Great.

But the 403b contribution from the previous pay period--from 3 weeks ago, with the paycheck issued 2 weeks ago--still has not made it into Mrs. Noah's retirement account. So Wespac has been sitting on/investing/using the money for the past couple weeks. Not illegal, but certainly a bit shady of an MO, IMO.

[LWJ]

Shady. Yes. Expected. Also yes.