er does not remit ee contrib to SIMPLE IRAs

[Guest amfam2]

Have client who withheld SIMPLE IRA deferrals from ees pay since 2001 but never remitted ee deferrals (or er match) until yesterday.

As I review the DOL's timing rule on remitting ee contributions to SIMPLE IRAs (29 CFR 2510.3-102), it is unclear to me on whether the er owes lost interest or earnings on the funds.

The paragraphs referring to the employer's obligation to make up lost earnings or interest seem to apply to pension plans only - not to SIMPLE IRAs. Has anyone come across a different interpretation? Does this er owe interest?

I noticed that the EPCRS program now includes SIMPLE IRAs - does anyone know if the IRS recommended method of correcting this type of violation includes procedures for making up lost earnings/interest on the funds?

jlg

[Gary Lesser]

A reasonable rate of interest would be required under EPCRS - would this, however, be considered an "egregious failure"? Do see the DOL's Voluntary Fiduciary Correction Program. The client has violated ERISA by dealing with the assets of the plan. Also, the plan--as it turns out-may also have a bonding requirement issue. The employer sd hire an ERISA attorney a.s.a.p. I can recommend one if needed that has already submitted applications under the new Rev Proc. If it "intentionally" filed incorrect W-2 it may have also committed tax fraud. The employer may also have to pay/pick-up employee's costs to correct.