Late deposits on match made each payroll

[Guest Peggy806]

An employer was late sending in the deferrals, so we are calculating the interest due to each participant from the DOL site. The match is made each payroll period. Since they legally have until the time of the employer's tax return to make the employer contribution, do they get a pass on paying interest on the match?

[ACox]

What does the document say regarding the timing of the match calculations? Is it an annual match - that is contributed each pay period, or is it a match that is calculated pay period by pay period?

[austin3515]

Absent something in the document that makes it due sooner, I would think (generally) the tax due date would be the only relevant date. So if you usually make your match a week after payroll, and one pay-period you make it two weeks later, you're still OK. Or if management decides to fund the match once a month, also OK.

In EPCRS though, I believe that if you accidentally omit an eligible employee from getting the match, if the match would have been funded each pay-period that you need to give them lost earnings. Can anyone confirm?

So I wouldn't go so far as to say lost earnings are NEVER needed.

[Guest Sieve]

austin is right about payment of the match--except that if the match is calculated on a payroll basis as per the plan document, then contributions must be made at least quarterly (rather than annually). (Treas. Reg. Section 1.401(k)-3©(5)(ii).) So, late match payments may therefore require that interest be paid.

Other than that requirement, I've never seen a plan require that the match be contributed on anything other than an annual basis, even though the employer may choose to make contributions per payroll.

I confirm that austin's interest payment conclusion seems right (i.e., interest paid to make up for lost opportunity from the time contributions administratively would have been paid to the plan).

[austin3515]

Without a doubt, Safe Harbor Match calced each pay-period must be funded quarterly, but I believe it is limited to that specific type of a match.

[Guest Sieve]

Agreed.

[Guest Peggy806]

austin is right about payment of the match--except that if the match is calculated on a payroll basis as per the plan document, then contributions must be made at least quarterly (rather than annually). (Treas. Reg. Section 1.401(k)-3©(5)(ii).) So, late match payments may therefore require that interest be paid.

Other than that requirement, I've never seen a plan require that the match be contributed on anything other than an annual basis, even though the employer may choose to make contributions per payroll.

I confirm that austin's interest payment conclusion seems right (i.e., interest paid to make up for lost opportunity from the time contributions administratively would have been paid to the plan).