Late deferrals - earnings calculation

[Guest robin s vatalaro]

I believe this issue has been discussed before on the Msg Bds.

If a plan sponsor violates the "deposit deferrals as soon as administratively feasible but not later than 15 days after month following......" rule, how does the TPA calculate earnings on the late deposit? I recognize that the truly correct way to calculate would be to compare the unit value of each participant's investment selection on the date the deposit should have hit, against the unit value of the investment selection on the date it did hit - and the difference should be remitted to the participant's accounts.

Obviously for a large plan these calculations, and researching the investment selections of all participants (assume plan uses the investment company as the recordkeeper and an outside TPA does the compliance work) would be very very time consuming.

Is anyone aware of any safe harbor calculations that might make this process easier? I'm guessing "no," just curious. Thank you.

[LCARUSI]

One safe harbor approach would be to calculate investment earnings for everyone assuming they were all invested in the fund with the best investment result for the period.

I see two potential problems with this approach:

1) It could get expensive.

2) I don''t know if it would be an acceptable approach to the IRS. They might consider the excess of the amount calculated my (generous) way over the true lost income to be an additional contribution - and that creates lots of additional problems.