Accounting, Payroll & Pension Issues/Posting 401k payments

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Question
$1375 is withdrawn from an employee for 401k.  This entry is recorded as 401k expense.

When this amount is actually paid to the investment company, how is it posted - against payroll liability or as a Pension Expense?

Answer
Marie:

The employee contributions are typically posted as a liability against payroll. Employer contributions are usually designated as a 401(k) pension expense. This is how it is generally done, but there are a few ways to enter this information. I would check with the company CPA and the payroll company to see how they like to do things: just to keep the records orderly and suitable for ERISA standards. You will need to coordinate this information with the payroll company, record keeper and TPA anyway in order to properly file the form 5500 for the plan.

But for the basics, here is a great little article and how to record these contributions.

http://www.ehow.com/how_8587382_post-401k-journal-expense-entry.html

If you need anything else, please do not hesitate to contact me.

Regards,

Tony DePasquale
President
Elysien Private Wealth

Accounting, Payroll & Pension Issues

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Tony DePasquale

Expertise

Pension plan questions, investment management services, plan fiduciary services, profit sharing, defined benefit planning, defined contribution planning, 401(k), 403(b), IRA rollover, plan consulting services, plan structure and plan design consulting.

Experience

I have over 10 years experience regarding pension plan management including; investment fiduciary services, plan structure and design, plan administration, employee education, Uniform Prudent Investors Act (UPIA) services, overall plan management consulting, Employee Retirement Income Security Act (ERISA) law and Department of Labor (DOL) law.

Publications
Nevada Business Magazine Henderson Press La Voce International Magazine

Education/Credentials
BA Economic History, University of Nevada Las Vegas Independent Pension Fiduciary ERISA 3(38) Investment Fiduciary ERISA 3(21) Fiduciary

Awards and Honors
Las Vegas Chamber of Commerce Excellence In Client Service Award In Business Las Vegas - Who's Who Banking & Financial Services

Past/Present Clients
Elysien Private Wealth - President Private Wealth Merrill Lynch - Financial Advisor

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