How soon after 401(k) deferral contributions are deducted from participants paychecks must the deferral contributions be deposited into the 401(k) plan?
Department of Labor regulation 2510.3-102 requires that amounts that a participant has withheld from his or her wages by an employer be contributed to the plan on the earliest date on which such contributions can reasonably be segregated from the employer’s general assets. Employee deferrals must be segregated from employer assets no later than the 15th business day of the month following the month in which they would otherwise have been payable to the participant in cash. Note that the 15th business day is not a ‘safe harbor’, it is the maximum time period. If DOL feels that the employer could have segregated the deferrals earlier than the 15th business day after the end of the month, DOL will assess penalties from the date it determines the deferrals could have been segregated, and not from the 15th business day.
Related Questions
- How soon after 401(k) deferral contributions are deducted from participants paychecks must the deferral contributions be deposited into the 401(k) plan?
- What happens to any unused contribution? Why can the participants get a refund of their unused contributions at the end of the Plan Year?
- When must 401(k) deferral contributions be remitted to a plan?
