When should firms process 401(k) money?

The financial advisers I consult for this column always hammer home the importance of saving. They especially encourage people to invest at least enough in a 401(k) plan to get their company's entire match.

But what if your company isn't cooperating?

That's the situation facing this week's letter-writer, Nicholas.

"Are there any guidelines that state how long a company can hold onto an employee's personal 401(k) contributions before actually investing/depositing the money into the employee's account?" Nicholas asked in an e-mail.

"I ask because at my current place of work my contributions are not actually deposited into my 401(k) account until two to three weeks after they are taken out of my paycheck, and it has taken even as long as eight weeks. I asked my company about it, and the reply was, 'We try and deposit 401(k) contributions within two weeks of the last paycheck of each month.'

"I am a little annoyed, because from my perspective, I am giving my employer a two- to eight-week interest-free loan. I have asked people at other companies, and they all say that their contributions are deposited the same day that they're taken out of their paycheck. If there aren't any guidelines governing this, is there a standard that most companies abide by?"

For help answering your question, Nicholas, I contacted Shane Stewart, a certified financial planner and chartered financial consultant with Deseret Mutual in Salt Lake City.

Shane first outlined the basics of how companies handle 401(k) contributions. He says a company's payroll department must withhold the 401(k) money and verify that it is correct, along with any matching money, for all employees. If the company is big, Shane says, that may take awhile.

After everything is verified, the money is sent to the plan trustee or record-keeper, Shane says. The trustee is a watchdog over the money and will verify the funds before forwarding them to investment managers.

"Depending on the resources of your company and the systems that they have in place, this could all happen relatively quickly or may take some time," Shane says.

He says the U.S. Department of Labor does have rules about contributions to 401(k)s.