Can deferrals be deposited monthly, even though employer's payroll is bi-weekly?

[Guest bgrazetti]

I have a 401(k) plan whose payroll cycle is bi-weekly. However, they only remit the contributions on a monthly basis. I know that the DOL's view is that the deadline for 401(k) deposits is as soon as they can reasonably be segregated from the general assets of the employer. Should I have this customer remit their contributions after each of the bi-weekly payrolls? They recently were audited by the DOL and they did not make this recommendation.......

Any opinions would be appreciated.

[R. Butler]

I would make that recommendation; surprised the DOL didn't.

[Guest jashendo]

They should remit biweekly, as a technical matter. As you point out, the rule is based on when the funds are capable of being segregated, and you would think that each payroll would be separately capable, etc.

However, in my experience, the DOL will not object to monthly remittances so long as they are regular and timely (e.g., Sept deductions deposited by first week of Oct; Oct deductions deposited by first week of Nov; etc.), provided that they also do not see any "funny business." Many TPAs (apparently) charge employers more for more frequent deposits, and that is (apparently) a reason for at least some of these types of cases.

[Harwood]

Bi-weekly payrolls mandate bi-weekly remittals, absent a compelling reason otherwise. To hold the money for several weeks is inviting big trouble to visit.

http://www.reish.com/publications/article_...m?ARTICLEID=353

[R. Butler]

However, in my experience, the DOL will not object to monthly remittances so long as they are regular and timely (e.g., Sept deductions deposited by first week of Oct; Oct deductions deposited by first week of Nov; etc.),

We have actually had the opposite experience with the DOL, that is why I was surprised the DOL didn't say anything about bgrazetti's situation

[Guest Kriso]

I have the same question with one employer. However, the employer has two locations, separate payrolls, some employees work at one location, then the other. The payroll is a nightmare!! ie: the same employee appears on TWO lists. If the employer deposits twice per month, can the MATCH be deposited once per month (this is being manually calculated from the payroll list) and buys into the mutual funds (the split for each employee must be done) be done monthly from one final listing for the month. Or, do the buys have to be done bi-monthly as well?

[Brian Gallagher]

the match generally just needs to be allocated by time the employer submits its tax forms for the year. The reason the dol wants the deferals in the plan so soon, is that it is the employees' money and the dol doesn't want it un-invested and in the eployers hands for that long.