Late Safe Harbor for one Participant

[BG5150]

One of my plans has a participant who should have entered the plan in 2007. She only works part-time, and the ER thought she wasn't eligible, and never sent me information on her.

So, they have to give her a Safe Harbor contribution for 2007 & 2008. I figured those out with earnings, and the ER will deposit the amounts.

My question is: do the amounts have to go on 5330 as a prohibited transaction?

[austin3515]

No, the er contributions don';t become a "plan asset" until they are deposited. The only reason that 401k becomes a PT is because the DOL regs specifcially state that 401k becomes plan assets "as soon as it can be segregated." If the employer stilll has the money it's account at that time, it using plan assets for its own benefit.

But as I saidf the case law is very clear on this - outstanding Employer contributions are not plan assets until they are deposited.

The only exception to that (I'm told) is in rare circumstances where the document specifically states that they become plan assets when due, but I'm also told that is really only in multiemployer plans.

[BG5150]

And this is an SCP thing, right? It's w/in 2 years.