Delayed Employer Contributions to 401Ks

Should I mention the dates on which my contribution match will be made to my employee’s 401K plan? What happens if I cannot make the deposit on time? – Carla Meyers, runs a flower shop chain in Oregon

Usually your 401K plan document does mention the dates by which your matching contribution is paid into your employee’s 401K account. In addition, there are some Department of Labor regulations that also come into play regarding the pay-by date for your matching contributions. You are required to send the plan’s assets to the trustee (for a trustee administered plan) inside of 15 business days after the month in which deductions are made ends. Since your 401K plan is an employee benefit plan, questions will be asked when there is undue delay in making your contributions if you cannot show just cause for the delay.

It is best for you, as the employer to make the deposits before every month end to avoid awkward questions being asked in case you face a DOL audit. If the DOL auditor is not satisfied with your explanation for any delay, then you may even be fined.

If keeping track of contributions and pay-by dates is getting troublesome and time consuming, you may want to consider using a self contained 401K suite like http://lifecycle401k.com/. Such suites let you track your deposits, manage the 401K account as well as generate government required reports with the greatest of ease. Your employees will also appreciate the immense flexibility and transparency they get in with such DIY 401K plans.

About Elliot Earl, Director, Pension Trade Association
Director, Pension Trade Association Founded in 1982, the Pension Trade Association [California Domestic Nonprofit Corporation #C1629080] is dedicated to helping workers save for their retirement through expanded coverage of 401k -type defined contribution pension plans.

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