Journal of Business & Economic Policy

Pay me now or Pay Me Later? The Impact of Untimely Employer Deposits to Defined Contribution Plans in the U.S. on Employee Wealth
Jeffrey S. Jones

Abstract
This paper provides insight into the impact those delays in employer deposits into employee retirement plans has on employee wealth. I provide a history of the regulations in the U.S. associated with timely deposits of contributions by employers on behalf of the employee. I construct hypothetical investment scenarios, and simulate the impact that delays in the deposit of contributions might have on employee wealth. I find that delays in deposits by employers tend to have a negative impact on accumulated employee wealth. Using total returns on the S & P 500 index over the period 1990-2014, this negative impact increases with longer delays for employees that are paid weekly at the end of the week. However, for employees who are paid monthly at the end of the month, the negative impact actually decreases with longer delays up to seven business days after the date of pay.

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