401(k) payable definition
/What is 401(k) Payable?
401(k) payable is a general ledger account that contains the amount of 401(k) plan pension payments that an employer has an obligation to remit to a pension plan administrator.
Presentation of 401(k) Payable
The 401(k) payable account is classified as a current liability , since the amount owed should be paid within one year. This account may be aggregated into the “other liabilities” line item in an organization’s balance sheet . It is rarely large enough to warrant a separate line item in the balance sheet.
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FAQs
Is 401(k) Payable a Current or Long-Term Liability?
A 401(k) payable is classified as a current liability because it represents funds owed to the retirement plan that must be remitted within a short period after payroll. Employers are required to transfer these contributions promptly, typically within a few business days. Since the obligation is settled quickly, it does not meet the criteria for long-term classification.
