Plan Sponsor Question re late deposit of deferrals

[Guest MaryMac]

Hello experts. Just a plan sponsor here with a question.

We have historically segregated funds into a plan account the date before payday, and invested the funds in participants accounts on the actual payday. This past pay period, we funded on the Monday following pay day, (ie. one business day later than normal) though we still segregated the funds on the day prior to payday.

I've search past threads for hours, and read 29 CFR 2510.3-102, and Rev Proc 27, which seem to be the most relevant.

I've heard of not breaking your pattern of deposit and once you've proven you can do it within a particular time frame, you have shown that this is your reasonable date.

We really pull out all the stops to meet our current timing, and sometimes we come close to not making it.

So, is breaking your pattern by one day a prohibited transaction? I think we met our requirements by segregating the money when we did.

Thanks for any help, and maybe any links to bulletins, announcements that provide more guidance than I've found.

[Belgarath]

I don't think you have any cause for concern.

[Guest dbvail]

If only everyone.......

Understanding that you deposit on a payroll to payroll basis, and that one time you were a wee bit late, it is my most humble opinion that he DOL will find no case for action.

If only everyone....

[BG5150]

I'm pretty sure the leeway is more than a couple of days.

[Mike Preston]

MaryMac, can we get you to record a message, as a plan sponsor, that we can play to our clients who don't share your enthusiasm for doing things correctly? As already stated, if only everyone.....

In any event, if a DOL auditor attempted to claim that your one day delay was a PT I would hope the auditor would:

1) be quickly overruled by his/her supervisor

2) find another job.

[PLAN MAN]

I agree with the others. It is great to have a plan sponsor involved and concerned. Adding my two cents, in general I would be sure to document the reason for the delay in your plan files. That way, if you are ever audited, you have all the information right there.

[jpod]

I'm not sure I would recommend documenting the reason; you never know when it might be used against you the next time (e.g., if the next time you deposit three days later rather than only one day later). Why bother documenting when you don't need a reason?

[wsp]

IMHO documentation of a 1 day delay in the investment of the assets is going overboard. Documentation of a 1 day delay in the segregation of the assets is not. Doubt you would find anyone to argue that a 1 day delay in investing of assets is not being a reasonably prudent fiduciary. Far different then segregating the assets within that "as soon as administratively possible" rule.

Of course this is under the assumption that by "segregating the assets" you are saying that you transferred them out of the company accounts and into a plan account.

[austin3515]

One day?? You get a gold star by any measure, Miss Mary Mac Mac Mac (I just couldn't resist .