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Originally Posted by DRU
I have my own 401k question to add to this...haven't read through all of this so I don't know if it's come up.
My withholdings come out of my check each week. My employer, though, doesn't deposit the money into my 401k but once a month. During that time, my money (as well as everybody else who works here and is in the plan) just sits either in their interest earning bank account, or it gets invested into their own accounts and then transferred into my own. This means that during that time my employer is actually earning a return on my money.
Is this standard practice for employers?
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Yes. The 457(b) plan I contribute to does the same thing. It is perfectally legal as well. It is the same as depositing money in a bank and they hold it for a day or until the next business day without crediting your account and letting it accure interest.