Late Contributions

[ERISAatty]

I typically specialize in priviate-sector plans and am aware of the dire consequences to an employer for being late in forwarding employee contributions (from salary deferrals) to a plan.

Now I'm trying to assess a late contribution issues for a school district 403(b) Plan and am hitting a dead end.

Since school plans are exempt from ERISA, is there a penalty/risk to the district for having been late for a couple of months (over the summer)? All contributions have now been properly forwarded to the vendor.

Since there's no Form 5500, they won't have to report the late contributions there.

Any authority that anyone knows about for the district having to make up lost earnings to participants? I suppose they could use the DFVC calculator to determine lost earnings, but am wondering as to whether there is potential enforcement on this point.

Any insignts welcome! Thanks.

[jpod]

One could not know unless one researched state statutes, regulations or ordinances that could possibly impose sanctions under an enforcement regime that are more serious then some reasonable amount of "lost earnings." Absent that, unless the pertinent plan documents or participation election forms impose some time limit, the best approach may be to do nothing, because once you volunteer something someone will smell red meat.

[QDROphile]

If the plan has terms relating to Treas. Reg. section 1.403(b)-8(b) and the contributions violated plan terms or the regulation, you might be in a situation that would cause you to look to EPCRS.

[ERISAatty]

Very helpful, jpod and QDROphile. Much appreciated!!