Large employers might only have one day and no more than 30 days to put employee contributions into 401(k) plans, but most observers don't think it will be a huge hassle.
Labor Secretary Robert Reich proposed a new regulation that would replace the maximum 90-day window employers have to make the 401(k) contribution. Instead, employers would follow the same rules they use when paying Social Security taxes - based on the size of the company's payroll - with the timetable as short as one day, but no longer than 30 days.
Both Mr. Reich and Assistant Secretary of Labor Olena Berg said the regulation should not be burdensome to employers because it is based on systems already in place to transmit funds quickly. Both officials said there will be a 90-day comment period.
Robert Liberto, vice president and director of defined contribution services for The Segal Co., New York, said the shortened window should not be a problem for large employers, but might prove more difficult for annuity plans and Taft-Hartley plans.
For example, a fund office that handles a Taft-Hartley plan for 100 employers or so tends to have problems collecting correct data on employees' hours, Mr. Liberto said. Most of the time, the contribution is based on the number of hours worked. So, the Taft Hartley plan office might need extra time to make sure its data are correct.