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SIMPLE Deposit Requirements


Guest Roger K.
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Guest Roger K.

What are the SIMPLE EE salary deferral deposit requirements? Are ER's required to remit within 7 days due to the new ruling that came out in Feb 08 for employers with less than 100 employees? Or do they still have 30 days from end of the month?

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The 7-day regs did not change the timing rules for remitting elective deferrals over into the plan, just created a safe harbor compliance method.

The general rules remains: "the earliest date on which such contributions can reasonably be segregated from the employer's general assets" DoL Reg §2510.3-102(a).

For SIMPLE IRA plans, DoL Reg §2510.3-102(b)(2) yet specifies that "the 30th calendar day following the month in which the participant contribution amounts would otherwise have been payable to the participant in cash" is the drop dead date.

So for a SIMPLE IRA plan, if elective deferrals are not remitted within the 7 day safe harbor, the employer may be taken to task to prove that the remittance was on the earliest date the contributions could reasonably be segregated from the employer's general assets. In any event, the remittance is due no later than the 30th calendar day after the month of the payday from which deducted.

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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If this is true then then IRS should revise PUB 560 P 10 which states that salary reduction contributions must be made within 30 days after the end of the month in which the amounts would have been payable. There is no mention of the DOL rule.

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I started to say that I don't think the 7-day safe harbor has any applicability to SIMPLE IRAs. But then I looked at Notice 98-4, in which the IRS says that the DOL has indicated that most SIMPLE IRA plans are covered by ERISA, so I guess the new safe harbor would extend to SIMPLE IRAs, at least as the DOL sees it.

But I think J Simmons said it perfectly - it's just a safe harbor, so the old rules still apply. And they are indeed still in the regs; the safe harbor was a new subsection.

Ed Snyder

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