Late Deposit - Lost Earnings

[MGOAdmin]

Can an employer contribute lost earnigs on match contributions even if they match contributions were made be the end of the year but not on the payroll date?

I have a client that made late deferral deposits and as a benefit to the employees they want to contribute not only lost earnings on the late 401k deferrals but also on the match.

Is there any issue with this?

[ETA Consulting LLC]

There is an argument that could be made that those additional amounts would constitute employer contributions and subject to 415 testing. I'm not saying that I would make the argument, but merely acknowledging that such an argument can be made.

Good Luck!

[MGOAdmin]

That was my concern. Sine interest is not required, it appears to be additional employer contributions.

I guess the easiest solution is to just give interest on the elective deferrals. So instead of giving 10% on both, maybe give 20% on the deferrals. The market did so well this year, that I think I could substantiate the interest.

[ESOP Guy]

the other thing is if you don't have a 415 problem or a destructibility problem what difference does it make if it is a contribution or earnings.

I have a hard time believing this will be big enough to throw off a discrimination test either. To the point I wouldn't even bother to do the test.

[K2retire]

Could you make the argument that NOT depositing lost earnings on the match is discriminatory since other participants had use of the money at an earlier date?