Need clarification on your 401k plan? Ask a Business Advisor

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QUESTION: Does it matter when I remit the employee deferral money to the 401k plan? I heard it is 7 days.

: We hate to say this, but it depends. The Department of Labor classifies retirement plans into two categories – small plans and large plans. The small plans (less than 100 participants) have 7 days to remit employee deferrals. The large plans (100 or more participants) are more vague. The Department of Labor requires these monies to be deposited as soon as administratively possible. A company can set a precedent by depositing money on the same day as payroll, which in turn determines what their individual definition of “administratively possible”. Once that is done all other deposits will be measured by this timing. To learn more about DOL compliance tune into our May webinar on Top ERISA Mistakes.

To get the inside scoop on retirement benefit best practices and avoid costly compliance penalties, register for the next Stambaugh Ness Wednesday webinar on April 19th, “Top 5 ERISA Mistakes”

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