401k long delay from payday to buying funds

[monkeyroar]

Has anyone ever encountered this? My spouse's 401k (through Fidelity) doesn't purchase the stocks until as much as 10 days after she gets paid (the paycheck from which the contribution is taken). This doesn't make any sense to me, and I feel like it can't even be legal. What's the money doing for 10 days? My spouse should be earning interest on that money. My 401k (through Wells Fargo) makes the contribution 1 or 2 days at most from my pay day, usually the same day as pay day. Would this be a problem with the provider Fidelity or with the employer?

[livesoft]

First, it's not a problem. Second, it is not Fidelity that is doing this. Third, it is perfectly legal.

[runner9]

http://www.bogleheads.org/forum/viewtopic.php?f=1&t=102676

Many prior threads, this one has info and a link to another which has info and links to another...

[Tortuga]

This is also addressed in the Wiki at

[url]http://www.bogleheads.org/wiki/401%28k%29#Timing_of_contributions
[/url]

[WHL]

mine is 1-2 pay periods (weekly) behind. Quite frustrating, but oh well, it's not a big deal.

[SSSS]

Hey, life's tough all over. I get paid on Friday & the 401k contribution is made the same day, but it's not actually visible in my 401k account until about 4AM on Saturday morning.

[hlfo718]

Is probably your company that is holding on to the cash. My company sits on the money for at least two weeks before sending it to Fidelity and then take a couple more days for them to post it. Is all legal according to DOL.

[kwahmaye]

As people have said already it is not illegal but you should be able to see a pattern. First trading day of following month ect. Fortunately my shares a purchased 1 day after payday. I get paid every Thursday and Friday the proceeds purchase new shares.

[monkeyroar]

Very good then, thanks for the responses.

[bogleblitz]

Good question as I would have ask myself. Mines is 1-3 days delay at Fidelity. I guess it doesn't matter after all.

Another annoying thing is the W2 tax contribution says i pay around $14,000 to 401k in 2012. Fidelity says I paid $13,000 in 2012. It turns out it was a delay of that 1 payment, and I thought somehow Fidelity was charging me $1000 in fees.

[jjbiv]

Delay in crediting employee deferrals to retirement accounts has become a popular issue for the Department of Labor during plan audits of late. Generally, the company must deposit employee contributions to the retirement plan as soon as they can be segregated from the employer's general assets. The 15th of the month following the month of the contribution is not a safe harbor ("do this and you'll be fine), it's an absolute deadline. If your employer routinely takes longer than a week, I'd suggest contacting the U.S. Department of Labor's Employee Benefits Security Administration. If you believe your employer would be receptive to discussing the issue, you could also take it up with them.

[tfb]

My spouse should be earning interest on that money.

Interest, what's that? 0.05% a year for 10 days is ...

[MKP]

mine is the Thursday following my paycheck.