Re: 401K - administrator holds contributions for 7 days before investing them
goa...@fractious.net
> Paychex does not invest my twice-monthly paycheck contribution to the
> plan until 7 days after the paycheck date.
They have until the 15th business day of the next *month* following
the payroll deduction, per Department of Labor regulations.
That said, even 7 days is a long time nowadays for this. Paychex
is absolutely capable of making that investment on your behalf
on the day in which it's taken from your paycheck.
> I could not think of another group in which to post this question, and
> will appreciate any response, or information about other resources or
> names of more appropriate groups in which to post..
misc.invest.financial-plan
--
Just A User
> Hello --
>
> Paychex administers my employer's 401K plan with Fidelity.
>
> Paychex does not invest my twice-monthly paycheck contribution to the
> plan until 7 days after the paycheck date.
>
> my former plan, administered by ING were invested on the same day the
> paycheck was issued.
>
> Is it legal for an administrator to hold funds that long?
>
> I could not think of another group in which to post this question, and
> will appreciate any response, or information about other resources or
> names of more appropriate groups in which to post..
>
>
> Larry Mehl
I see a three week lag in my contributions to my 401k run by Wachovia. I
don't see a big deal about it.
Snowbound
What if you were to find out that during those three weeks, your money
had tripled in value by its use during the time it was out of your
control, but that even so, *you* were getting only what you had put in?
Would you care then?
Just A User
well it's just about impossible for money to "triple" in just three
weeks. The financial markets don't really work like that.
Stormin Mormon
to post to this list.
--
Christopher A. Young
Learn more about Jesus
www.lds.org
.
"mehlREM...@cyvest.com" <me...@cyvest.com> wrote in message
news:e05c857c-4aa3-400b...@h11g2000prf.googlegroups.com...
Snowbound
Just A User <k...@up-yours-spammer.net> wrote:
<snip quotes>
> well it's just about impossible for money to "triple" in just three
> weeks. The financial markets don't really work like that.
Really? Well, I guess-- given your concern about your own money you set
aside to nurture you in your senescence-- you would know how money
grows.
Still I can't help but notice that you did not answer the question. BTW,
did you know that any small investor who placed a market order for Bear
Sterns (BSC) stock last Sunday night (when it was $30/share) nearly
tripled their money by Tuesday afternoon (purchased stock @ $2.86/share
@ market open on Monday morning and sold on Tuesday for ~ $8/share)?
Less $20 in brokerage fees, of course.
Of course, if a person doesn't really care where his money was while BSC
stock tripled, well, that's okay. After all, "financial markets don't
really work like that." More meat for me.
Just imagine what JP Morgan made on the deal. You know, like the people
who get to hold onto your retirement money for three weeks. But it's all
good. I'm sure they think you are a great guy.
Just A User
that bear stern deal was a rarity watch any other group of stocks and
see if they triple their value in just three weeks. ps my portfolio is
up over 12% so far this year, which is better than most fund can do.
Snowbound
I'm probably wasting my breath, but that is exactly my point: for
investors like you, the BSC deal is a veritable once-in-a-lifetime
chance; a coincidental occurrence as rare as seeing 4 full eclipses in
one week. Such an opportunity will never present itself again, so why
bother looking for it? Better to just let your money disappear for three
weeks. A lo/no risk 12% ROI saves on ulcers.
And of course, you still avoid answering my original question. Do you
even remember what it was? It required a simple yes or no, not a
prolonged thread about personal views of stock market machinations.
goa...@fractious.net
> And of course, you still avoid answering my original question. Do you
> even remember what it was? It required a simple yes or no, not a
> prolonged thread about personal views of stock market machinations.
The legal answer was posted the same day you asked.
They have up to the 15th business day of the month
following the pay period.
--
Snowbound
wrote:
That was the OP's question, not mine. My question followed up the
statement:
"I see a three week lag in my contributions to my 401k run by Wachovia.
I don't see a big deal about it."
I asked: "What if you were to find out that during those three weeks,
your money had tripled in value by its use during the time it was out
of your control, but that even so, *you* were getting only what you had
put in? Would you care then?"
That question set off the entire subsequent tiresome thread, yet that
question was never answered. As I mentioned in the article to which you
are responding, my question requires a simple yes or no.
My intent was to show that a lag period of any length, regardless of how
"legal", is damaging to the saver's financial health and is _properly_
viewed as utterly unacceptable absent some sort of very good incentive--
say, dollar-for-dollar employer matching contributions, fully vested.
Apart from system or network failures or similar mitigating
circumstances, there is really no good reason not to electronically
debit and/or credit accounts instantly or at worst, within 3 days of the
actual transaction, and no individual saver should allow for such
shenanigans with *their* money without documented and reasonable
explanation.
Just A User
Sure it's okay to look for a stock that is going to triple your money,
but the chances of finding one are extremely slim. To answer your
original question: would I care if my money tripled in value while it
was not in my control and I was only credited with the original amount.
Not really. I do okay with my personally controlled brokerage account.
goa...@fractious.net
> That was the OP's question, not mine.
My mistake. I forgot who the OP was.
> My question followed up the statement:
>
> "I see a three week lag in my contributions to my 401k run by Wachovia.
> I don't see a big deal about it."
>
> I asked: "What if you were to find out that during those three weeks,
> your money had tripled in value by its use during the time it was out
> of your control, but that even so, *you* were getting only what you had
> put in? Would you care then?"
You may care, but life is rough. That's the way the
system works. There are sometimes lags in financial
transactions and unless you are engaging in a transaction
completely within a single entity (ie. buying stocks
in an already established brokerage account), sometimes
those lags suck.
If you think three weeks missing out on a single paycheck's
contribution to your 401k sucks, you've got a whole new
world of suckiness coming when you try to roll your 401k
balance out to an IRA. Your 401k balance will all be
turned to cash, and it'll stay cash until a check is
sent either to you or to your IRA trustee. You may miss
out on several weeks of market returns on your entire
401k balance, not just a single paycheck.
I suppose you could plan for this buy purchasing some
at-the-money options (within some other outside account)
on the same day as your 401k account is turned to cash
and you may be able to control that timing buy turning
it to cash yourself before you submit the papers for the
rollover. (most 401ks have a cash-equivalent fund
available).
> My intent was to show that a lag period of any length, regardless of how
> "legal", is damaging to the saver's financial health and is _properly_
> viewed as utterly unacceptable absent some sort of very good incentive--
> say, dollar-for-dollar employer matching contributions, fully vested.
It's properly viewed as part of the process. Sometimes it
happens. And if your portfolio is diversified (as most
retirement portfolios, at least, seriously ought to be),
you're not going to miss out on a 3x run-up.
> Apart from system or network failures or similar mitigating
> circumstances, there is really no good reason not to electronically
> debit and/or credit accounts instantly or at worst, within 3 days of the
> actual transaction, and no individual saver should allow for such
> shenanigans with *their* money without documented and reasonable
> explanation.
It's certainly possible - usually with larger business and
folks using automated payroll processors (ie. ADP or Paychex).
But it's not required nor necessarily cost-efficient, especially
for smaller employers. They have several weeks which seems
like a reasonably fair balance. They used to have longer
than that and some did abuse it. 3 weeks is still pretty
long - and certainly long enough to be worth asking one's
payroll department about. But it's absolutely not a big deal
and "your money could have tripled" won't help anyone get
that straightened out. At best, your payroll folks will
just assume you've been reading get-rich-quick scams on
the internet. At worst, they'll assume you're a nut and
dig in their heels and not actually try to improve their
system. Either way, the employee has no recourse since
it's very well within legal guidelines.
--
Just A User
Snowbound is probably a person who spends many waking hours looking for
the next super trade (assuming that he has an established account
somewhere). Now that is fine if he is really good at it and it's his or
her full-time job. Most people don't have the knowledge to engage in
that kind of activity. I know people like that, always spending too much
time looking to strike it rich in the markets. Then years later they
realized that they 'wasted' all that time and have nothing to show for it.
Personally I can think of better things I would rather be doing. My 401
is up about 10% for the year. And my brokerage account with one of the
online discount brokers is up about 13% for the year. That is fine with me.
Snowbound
wrote:
> You may care, but life is rough. That's the way the system works.
> There are sometimes lags in financial transactions and unless you are
> engaging in a transaction completely within a single entity (ie.
> buying stocks in an already established brokerage account), sometimes
> those lags suck.
I really don't care whether they "suck" or not. I'm saying they are
unacceptable and wage earners are not obliged to accept them. Absent
any incentives, workers would be much better off not contributing to an
employer's 401k and losing their money for three weeks. They could
then take the contribution out of their own paycheck, open their own
retirement investment fund and triple their money if they choose or
invest in safe low-return funds. Losing the interest for three weeks is
just inane and stupid. Having said that, if people want to be stupid
and give their money away for whatever period of time, without
remuneration or profit, so be it. My point stands on its own.
> If you think three weeks missing out on a single paycheck's
> contribution to your 401k sucks, you've got a whole new world of
> suckiness coming when you try to roll your 401k balance out to an
> IRA. Your 401k balance will all be turned to cash, and it'll stay
> cash until a check is sent either to you or to your IRA trustee. You
> may miss out on several weeks of market returns on your entire 401k
> balance, not just a single paycheck.
BTDT. I deliberately chose institutions that took less than a single
week to conduct the transactions (401k -> Fidelity IRA). Also, the
conversion to cash is not such a bad thing, since your 401k
administrator can electronically transfer the funds to your bank
account (if not to your choice of IRA accounts), where you can withdraw
it in a cashiers check and deposit it immediately into your new IRA
without delay. Minimal planning, no violations, no fees, no penalties,
no missing money. Voila!
> I suppose you could plan for this buy purchasing some at-the-money
> options (within some other outside account) on the same day as your
> 401k account is turned to cash and you may be able to control that
> timing buy turning it to cash yourself before you submit the papers
> for the rollover. (most 401ks have a cash-equivalent fund
> available).
I suppose planning for the transference of large sums of money is not
such a bad idea. As I said, my own transfer went very smoothly, the
money was never out of my control for more than three days and the
funds were credited instantly. Anything less these days is
unacceptable. Sorry, that's just the way it is.
> > My intent was to show that a lag period of any length, regardless
> > of how "legal", is damaging to the saver's financial health and is
> > _properly_ viewed as utterly unacceptable absent some sort of very
> > good incentive-- say, dollar-for-dollar employer matching
> > contributions, fully vested.
>
> It's properly viewed as part of the process.
Moo or baaaa. It once was viewed that way. Now that view is completely
prehistoric. Extinct, even. Or at the very least, bovine.
> Sometimes it happens.
The one thing you have posted thus far that makes sense in a world of
electronic fund transfers. *If* it happens-- and I acknowledge that it
does, rarely-- The circumstances are always documented for the perusal
and approval of the customer... by any institution worthy of holding
other peoples' money, anyway.
> And if your portfolio is diversified (as most retirement portfolios,
> at least, seriously ought to be), you're not going to miss out on a
> 3x run-up.
Right, because you've got that 12% ROI to look forward to. That's fine.
Investments like that should be part of any retirement fund. There
should also always be the availability and ability to take advantage of
2x, 3x, 4x and more "run-ups". Why? Because they do occur-- much more
frequently, now that years of "conservative" fiscal policies have so
undermined market stability. Gordon Gecko said, "Greed is good. Greed
works." To which I reply, "Panic and fear are MUCH better. Disaster and
market implosions spread the profit much more evenly." And because with
a modicum of foresight and just a little interest in the fundamentals,
*anyone* can take advantage of the "run-ups". This can make your 12%
safe and steady look more like a crusty urinal where you piss away your
retirement life blood.
> > Apart from system or network failures or similar mitigating
> > circumstances, there is really no good reason not to electronically
> > debit and/or credit accounts instantly or at worst, within 3 days
> > of the actual transaction, and no individual saver should allow for
> > such shenanigans with *their* money without documented and
> > reasonable explanation.
>
> It's certainly possible - usually with larger business and folks
> using automated payroll processors (ie. ADP or Paychex). But it's not
> required nor necessarily cost-efficient, especially for smaller
> employers.
How small? Mom and pop businesses? How many of them offer their 2 or 3
employees 401k's? There are relatively inexpensive automated systems
for virtually every business above a certain cash flow level. The
cost-- in terms of equipment and software and even learning curve-- is
negligible for any business likely to offer such plans.
> They have several weeks which seems like a reasonably fair balance.
If it's okay with their employees, it's okay with me. Given that,
what's the problem with documenting the lag time? What is done with the
money? Where is the money kept? In a mattress? No? In an account, then?
What does it earn there? Who is the fiduciary? Who keeps those
earnings? Why aren't they returned to the owner of the money? Is that
accounting too expensive as well? Too time consuming? Or is it too
revealing?
> They used to have longer than that and some did abuse it.
You use the word, "abuse". Not once have I implied abuse. I have done
nothing but ask questions, none of which were ever answered without a
long bullshit session attached, hiding behind what is "legal". Your own
answers make it seem highly likely that what you call abuse isn't just
a thing of the past.
> 3 weeks is still pretty long - and certainly long enough to be worth
> asking one's payroll department about.
3 weeks is unacceptable, seriously. The greater the amount of money,
the less acceptable it is. It points to some serious shortcomings,
either in the business itself or in its commitment to the employee's
benefit. Questioning the payroll department (or person, let's not wax
all grandiose for incompetence) is a good start, but only if it
produces satisfactory answers, backed by documentation.
> But it's absolutely not a big deal and "your money could have
> tripled" won't help anyone get that straightened out.
What possible reason could the payroll "department" have to ask to hear
your reasons for wanting to know where your money is. Who cares *what*
they think of your interest? It's your money. You would have to be
foolish, if not nuts, not to care about where it is and what it is
doing. If "payroll" demands a reason, tell them it is your money and
you want to know.
> At best, your payroll folks will just assume you've been reading
> get-rich-quick scams on the internet.
So what? What justifies their curiosity in the reasons for your
concern? If anything, they should appreciate your interest. You are
simply looking out for your interests. Who cares *what* they think?
Your overweening worry about the payroll department's opinion of you
increases my concern that they are doing something very wrong, with or
without intent.
> At worst, they'll assume you're a nut and dig in their heels and not
> actually try to improve their system. Either way, the employee has
> no recourse since it's very well within legal guidelines.
If payroll decides not to improve its performance because they are
unreasonably insulted, it's a good bet they are doing something outside
the interest of the employee. It would be a public service then, for
the interested employee to inform his or her peers and maybe the proper
authorities. Of course employees have recourse. They can halt their
automatic deduction-- instantly cutting off the free money loan to
those who do not have their best interests at heart-- and start their
very own IRA, probably offering more options and definitely providing
quicker accounting.
Snowbound
Just A User <k...@up-yours-spammer.net> wrote:
> Snowbound is probably a person who spends many waking hours looking for
> the next super trade (assuming that he has an established account
> somewhere). Now that is fine if he is really good at it and it's his or
> her full-time job. Most people don't have the knowledge to engage in
> that kind of activity. I know people like that, always spending too much
> time looking to strike it rich in the markets. Then years later they
> realized that they 'wasted' all that time and have nothing to show for it.
Wow. What an insane assumption. Of course, that's how you operate,
according to your own posts. You just assume and assume, and let
everyone else be responsible for your well-being. Well, Scarlett, I sure
wish you success at always relying on the kindness of strangers. Failing
that, I sure hope you enjoy your spot under the bridge.
> Personally I can think of better things I would rather be doing. My 401
> is up about 10% for the year. And my brokerage account with one of the
> online discount brokers is up about 13% for the year. That is fine with me.
Good for you. Keep doing whatever it is that makes you happiest right
now.
Snowbound
Great. Here's to your success at your plan. Notice I had no impulse to
insult you or make unjustified assumptions about you? You say it
wouldn't bother you if you discovered that your money tripled in value
during the three weeks it was out of your control and you made zero from
that value increase. I believe you. I don't know how long that easygoing
attitude would last as the amounts build up, but I believe you mean what
you say. I may have my own opinions about your assessment, but unlike
some contributing to this thread, I will keep them to myself.
Just A User
> In article <WuWdnR6ZioKZuHja...@giganews.com>,
> Just A User <k...@up-yours-spammer.net> wrote:
>
>> Snowbound is probably a person who spends many waking hours looking for
>> the next super trade (assuming that he has an established account
>> somewhere). Now that is fine if he is really good at it and it's his or
>> her full-time job. Most people don't have the knowledge to engage in
>> that kind of activity. I know people like that, always spending too much
>> time looking to strike it rich in the markets. Then years later they
>> realized that they 'wasted' all that time and have nothing to show for it.
>
> Wow. What an insane assumption. Of course, that's how you operate,
> according to your own posts. You just assume and assume, and let
> everyone else be responsible for your well-being. Well, Scarlett, I sure
> wish you success at always relying on the kindness of strangers. Failing
> that, I sure hope you enjoy your spot under the bridge.
>
savings at age 35 so not likely I will be having a spot under the bridge.
>> Personally I can think of better things I would rather be doing. My 401
>> is up about 10% for the year. And my brokerage account with one of the
>> online discount brokers is up about 13% for the year. That is fine with me.
>
> Good for you. Keep doing whatever it is that makes you happiest right
> now.
My plans do make me happy and wealthy.