Understanding 401(k) recordkeeping reconciliation.

What recordkeeping reconciliation compares

Reconciliation proves that three records agree: what payroll says was withheld and owed, what the plan’s ledger posted to participant accounts, and what the custodian or trust actually received and holds. A difference between any two is an exception until someone explains it.

Reconcile at three levels

• Remittance: each payroll deposit total equals the sum of the ledger postings for that payroll, by money source.
• Plan: the total of participant balances equals the trust or custodian balance at the valuation date.
• Participant: each participant’s contributions match payroll year to date, which also feeds 402(g) and 415(c) checks.

Why timing matters

Under the DOL plan asset regulation, participant contributions become plan assets as soon as they can reasonably be segregated from the employer’s assets, and no later than the 15th business day of the following month; plans with fewer than 100 participants have a 7-business-day safe harbor. Reconciling remittance dates as well as amounts shows late deposits early, when the Voluntary Fiduciary Correction Program and lost-earnings calculations are still simple.

Typical causes of a difference

• A participant’s deferral withheld but missing from the deposit.
• A new hire posted before entering the plan.
• Rounding across a per-pay-period match.
• A deposit split across two payrolls.
• A loan repayment coded as a deferral.

Make it a workflow, not a spreadsheet

A good process matches automatically where rules can, routes each remaining difference to an owner, and records how it was resolved and by whom. The KinetiPlan interactive demo shows this on demonstration data: four remittance batches, a missing deferral matched by rule, a rounding difference, and a resolution that requires a named reviewer and note.