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.
Related AccountingTools Courses
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.