Expert: Arthur Naman - 3/12/2010

Question
How the company in USA account for 401 k contribution.
Does the premium paid matching the employee's contribution is expensed as and when paid? Is there any liability the company is suppose to recognize on a reporting date?
Thanks

Answer
The company's portion is like any other pension payment -- an employee expense or pension expense.

As to the question of whether or not there is any liability, the answer depends on whether or not your company is on the accrual or cash basis accounting or tax system.

If accrual, then yes there is liability to recognize if payment is not made at the time the liability is incurred.