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  • 401K investing

    My husband works in NC, coporate headquarters located in TX. He is paid bi-weekly and his and employer's contributions to his 401K don't get invested on a regular basis. It can take anywhere to a week to 2 months before the company places the funds into the 401K program.

    We are wondering if there are any legal requirements about how long the company can hold your funds out of your 401K before vesting them? I've checked and re-checked his handbook and only see that they offer a 401K program with a set percentage for matching.

    My husband says he thinks he notices a trend of the money going in when the market is going down and takes longer to go in when the market is trending up.

  • #2
    The law requires that funds be forwarded "as soon as they can be segregated" and "within a reasonable time". This has been generally interpreted to mean no more than 15 days following check date. So, one week would not be a violation; 2 months would be. You can contact the U.S. Dept of Labor, which administers ERISA, the act that regulates retirement plans.
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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    • #3
      BTW, I have recently been involved in several situations where, for reasons beyond my control, I was unable to transfer 401k funds for nearly a month. Since the reason was not within my control and since I did make the transfer as soon as I was able to, I was still within the law since I made the transfer "as soon as was administratively possible" even though it exceeded 15 days. (This has been checked with ERISA attorneys at a very prestigious and well known law firm, by the way, who confirmed that I was acting legally under the specific circumstances involved.)

      I'm not saying this is necessarily the case - just that there can be situation specific exceptions on occasion to the 15-day requirement.
      The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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      • #4
        ah, cbg, thanks for the additional information. 2 months, however, would be too long under nearly any circumstances.
        I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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        • #5
          True. I can't think of any circumstances in which that would be acceptable.
          The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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