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What Is “Always Fund Distributions Before Net Pay?” (Solved!)

Jamey Muller
Updated: July 6, 2022
3 min read

Employees filling out payroll forms may encounter “always fund distributions before net pay” in the direct deposit distributions section.

What does it mean?

Here’s What “Always Fund Distributions Before Net Pay” Means:

The “always fund distributions before net pay” relates to you having multiple accounts set up for paycheck deposits. When you click “yes,” you advise your employer to always put a dollar amount or percentage to a particular account before distributing the rest of your net pay into your balance account.

For instance, you may ask for human resource department to deposit 25% of your net pay into a savings account, while the rest of the money will go to your checking account.

You can set up a dollar amount per destination account with some payroll firms and not a percentage. Others offer both.

Fund distributions before net pay is an excellent way to automatically direct your money into your different bank accounts. It is also faster and more efficient than doing money transfers.

What Does Net Pay Distribution Mean?

Net pay distribution pertains to your net or take-home pay being distributed to an employee’s bank account or accounts.

There are different ways your funds will be funneled to your accounts after setting up multiple direct deposits and filling out the deposit order.

You may request your human resource staff to follow the deposit order of savings to a checking account or savings to checking to another checking account.

You also can choose if you want to distribute a specific dollar amount or a percentage of your net pay to your accounts.

If you want to distribute your net pay to different financial institutions, you can do that.

For example, your monthly net pay is $1,000. You want to have $400 go to your savings account first and the rest to your checking or balance account. 

This means that $600 will automatically be deposited into your checking after $400 has been sent to your savings account.

If your net pay for the month is only $400 and the deposit order is the same, $400 will be deposited into savings, and nothing will go into your checking account.

You may also divide your paycheck by a 50/50 percentage between your savings and checking accounts.

If your net pay is $1,000, $500 will go to your savings first, and the remaining $500 will be deposited into the checking account.

Dividing your net pay into three accounts by amount is also possible. For example, you want $250 for savings, $350 for checking, and the balance for a different checking account:

If your monthly salary is only $600 and the deposit order is the same, the first $250 goes to savings, the remaining $350 deposits to checking, and nothing will go to the balance checking account.

You may also combine the amount and percentage. For instance, you want your $1,000 net pay to be divided into three accounts – $400 to your savings, 10% ($100) to your checking account, and the remaining salary to your balance checking account.

fund-distributions-before-net-pay_woman-checking-documents

What Are Direct Deposit Distributions?

Direct deposit distribution is how an employee's pay is directly allocated to as many bank accounts as they may have.

This enables you to split your paycheck between multiple accounts by amount or percentage.

With direct deposit distribution, accounts will be designated a deposit order. This determines the order in which the payment will be deposited. The account with a deposit order of one (1) will receive the salary first.

You may specify a partial distribution of your net pay or have 100% percent deposited to your balance account.

Direct deposit allows you to access your net pay immediately, usually a day after your payday. 

If your employer transmits the payroll two banking days before the paycheck date, the money will be available in the receiving banks the same day as your paycheck date.

Direct deposits transmitted on a non-banking day will be available the next banking day. 

This method is not subject to a check clearing wait method, but if your salary is paid via check, the money can take a week or more to be available in your accounts.

Sometimes, funds via direct deposit do not show up as planned. This means that the bank takes a few extra days to process the distribution. 

Common reasons are holidays or the transfer request went out after business hours. A 24-hour wait is advised before you start worrying about your money.

Sources:

UIOWA HR: Multiple Direct Deposit Examples
KY Personnel Cabinet

Written by
Jamey Muller
I'm the head-writer @ Knowledge Eager (or, in plain English, I'm the guy writing the majority of the content here). Addicted to the stock market, football, sushi and tacos.
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Jamey Muller
I'm the head-writer @ Knowledge Eager (or, in plain English, I'm the guy writing the majority of the content here). Addicted to the stock market, football, sushi and tacos.