Missed match deposit

[Chippy]

Plan makes matching contributions each payroll and then does a true up at the end of the plan year. The 2011 true up deposit was not made. They are going to make the deposit now, but is there a penalty due for this missed deposit? Do I file form 5330? I guess i'm asking is what all needs to be done to properly correct this? I'm guessing it's not as easy as just making the deposit now.

[ETA Consulting LLC]

Not really. The "penalty" on late deposits is a prohibited transaction issue where the DOL considers amounts withheld from payroll to be plan assets immediately after being withheld. Should these amounts not be timely deposited into the trust, then the employer is considered to have not separated those assets from the company's assets; and that's a prohibited transaction.

In your situation, nothing was withheld. The employer merely failed to fund amounts the participants were entitled to under the terms of the plan. The debate is whether those deposits would be considered as annual additions in 2011; or 2013. I'd argue 2011 due to an oversight and leave it at that.

Good Luck!

[Chippy]

So are you saying they should just make the deposit now, no additonal earnings or penalty due? it was only $771 split between 5 people . 415 shouldn't be an issue

[ETA Consulting LLC]

Yes. That's how I'd deal with it.

Good Luck!

[BG5150]

No earnings? Even though the match was due by 12/31/12?

[401king]

No earnings? Even though the match was due by 12/31/12?

There is no firm due date if it is a non-safe harbor match, correct?

[masteff]

Earnings on $771 is a pittance. I'd add earnings just so you can argue that you were within the spirit of EPCRS' correction principles should it get questioned later.

[Chippy]

Yes, it was a non-safe harbor match and it was for 5 shareholders of the company.