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Was it? Clearly you don't meet the general rule of "the earliest date on which such contributions or repayments can reasonably be segregated from the employer’s general assets." If this is a plan with fewer than 100 participants at the beginning of the plan year, the safe harbor would be: So, it is deemed contributed on the earliest date on which such contributions or participant loan repayments can reasonably be segregated from the employer’s general assets if deposited no later than the 7th business day. Does mailed on a the 7th business day mean deposited on the 7th business day? I don't think so. Lets look at the final rule published on 1/14/2010. I think it is pretty clear that deposit means deposit. In your example, the deposit takes place on the 23rd, which is outside of the safe harbor window. Since the employer in your example fails to satisfy the general rule, it is their responsibility to deposit the contributions no later than the 7th business day following. The contributions are late.

All good answers already, but my comment would be that there is little (no?) excuse for mailing checks in today's world. The "vendor made me do it" excuse does not work. If the vendor does not make electronic deposit possible, the plan sponsor should choose a vendor who does support this. PNJ

You have gotten good responses previously, but I just want to state it unequivocally that this employer is WRONG in what they are doing regardless of whether mailing or receipt is the answer. They need to stop thinking about this 7/8 day window. There is no doubt they can get the check in earlier; we don't even talk to clients about the "8 day rule". They are told they need to get the money on its way the same day they do the payroll (or maybe a day or two later, but that's it). Anything else is a recipe for a problem.

Isn't the "original sin" on Congress? Instead of reasonable penalties they do things like: Miss an RMD the correction and maybe pay a small penalty, if you want interest on the missed payment to the government. Nope it is a 50% excise tax no one at the IRS wants to impose because it is draconian. No one wants to tell a retiree on a fixed income becasue someone didn't compute the RMD right they have to pay $1,000 of the $2,000 that should have come out of their 401(k) account to the IRS. So they came up with VCP to fix it for a reasonable cost and penalty waiver. Or because one of what seems like an endless list of things that can go wrong on the client's or the TPA's side of things the plan doesn't simply make a correction to get people back to where they would be and maybe pay a small fine because of an error.... Nope it is the plan is technically disqualified. I have ESOPs that have 100s of millions in assets in them and if you read the rules literally when the disqualifying defect happens all those assets are now taxable and oh those 500 distributions you paid last year and the year before that figure out which ones went to an IRA that money shouldn't be in the IRA even though those people had nothing to do with the error. So once again the IRS has simply come up with a more reasonable way to deal with this. Yes, add to it my understanding is the IRS has less employees working for it than it has in decades because of budget cuts by congress and the POTUS and sure you have a mess. But Congress could have come up with a realistic set of penalties and corrections most of which could be handled as self corrections with maybe a form paying a penalty. The IRS could choose a sample of them to make sure people are doing it right.

It was only a matter of time before they breached the firewall between VCP and examination. Why go looking for violations via inefficient random audits when they have them sitting right there? Except that the pipeline will dry up of course.

A self-funded health plan is not subject to the ACA's mandatory Medical Loss Ratio (MLR) rebate requirements and disposition/handling of the "excess" will be governed by the plan document. If you don't find anything in the plan document and it's a "general assets" plan (no trust) then the excess belongs to the sponsoring employer to do with as it sees fit.

From a recordkeeper's point of view - check to see if whoever holds the plan assets can work with ACHs or wires and eliminate the paper check processing altogether. The recordkeeper may be able order the ACH directly, once the contribution data has been received.

Absolutely. Allocating and mailing is not the same thing. I think you are looking at it backwards though. The allocation or investment of the contribution would come after the deposit. If I deposit a contribution today, and the recordkeeper allocates that contribution to 10 participants tomorrow (or 10 investments of the same participant), the deposit date is still today. I think that is clearly distinguishable from when you mail a check, which also gives the employer another day or two with the participant contributions since it will not actually leave the employers assets until cashed. Lets also remember that the due date is not 7 business days. The due date is the earliest date on which such contributions or repayments can reasonably be segregated from the employer’s general assets. The safe harbor simply gives you the benefit of the deposit being deemed to be made on the earliest date on which such contributions or repayments can reasonably be segregated from the employer’s general assets if deposited no later than 7 business days following.

A sale of stock does not involve a shareholder vote. It is an investment decision to sell by the owner of the stock. It does not involve a corporate action (such as a merger) that requires a vote of shareholders. No vote needed, so there’s no vote to pass-thru to ESOP participants.

Which matters call for participant-directed voting of an ESOP’s shares (if the shares are not publicly traded) sometimes might vary according to a relevant State law. IRC § 409(e)(3) Requirement for other employers If the employer does not have a registration-type class of securities, the plan meets the requirements of this paragraph only if each participant or beneficiary in the plan is entitled to direct the plan as to the manner in which voting rights under securities of the employer which are allocated to the account of such participant or beneficiary are to be exercised with respect to any corporate matter which involves the voting of such shares with respect to the approval or disapproval of any corporate merger or consolidation, recapitalization, reclassification, liquidation, dissolution, sale of substantially all assets of a trade or business, or such similar transaction as the Secretary may prescribe in regulations. IRS Publication 6392 explains an IRS view that there might be nothing to pass through for directed voting if relevant State law does not provide for shareholders to vote on a matter. https://www.irs.gov/pub/irs-pdf/p6392.pdf States’ laws vary about which decisions require a vote of a corporation’s shareholders.

The numbers add up; see below. Once money is borrowed from a 401(k) it is just money; I don't see why it couldn't be used to create a rollover IRA unless I'm missing something in the regs, which I did not review for this discussion. If your accountant has a cite for why this can't be done he should share it. 401k value before distribution: $225K invested $25K loan $250K total 401k and IRA values after distribution and new loan: $200K invested in 401k $25K 401k loan $25K IRA $250K total

PBGC has lots of money and staff and it often feels like they are just looking for things to keep busy. That said, they are looking for proof that the company has the money to make the contributions in the future. They may be overzealous, but they have the authority to make things very difficult for the sponsor if they don't cooperate. They probably want to see if the company really doesn't have the cash, or did they siphon off the cash as compensation or bonuses. In other words, they want to see where the cash is going if it isn't going into the plan. I would recommend that you work to appease the PBGC, if possible. If the client doesn't want to provide tax forms, ask the PBGC what other types of documentation they would accept.

Excerpted from https://www.asppa-net.org/news/irs-whistleblower-informs-ara-change-could-doom-voluntary-corrections "Word of the dramatic shift in focus was brought to the attention of the American Retirement Association by an anonymous IRS whistleblower. The existence of the forthcoming shift in procedure was confirmed independently. * * * "Information indicates that in the next couple of weeks procedures in the VCP program will be updated in a manner that will subject substantially more cases to the Examination function within IRS. "Essentially, if information requested by the IRS is not sent in by practitioners within a 21-day window, the case will be automatically referred to Examination. What’s more, if the taxpayer withdraws a VCP case, it will be referred to Examination. "Moreover, if the taxpayer misses the 21-day window and the case is referred to Examination, the taxpayer will not be allowed to re-submit the case for consideration under the VCP. If the taxpayer disagrees with how the compliance failure should be corrected, the case will be referred to Examination." Full text at: https://www.asppa-net.org/news/irs-whistleblower-informs-ara-change-could-doom-voluntary-corrections