Deferrals and a new payroll provider

[52626]

In January, our client will change payroll providers. I think I would rather have a root canal!!

Everyone is working diligently to be sure the correct information is transferred to the new payroll vender. But we all know it is inevitable something will go wrong!

Question: would there be any protection if the employer gave a blackout notice to the participants about the upcoming change in the payroll vendor, and while they do not expect any issues, there could be a delay with processing the first two payrolls of 2017. Would this allow a cushion in the event a payroll is not timely submitted and avoid filing the Form 5330.

OR is the client SOL and if there is a late payroll due to the vendor change, he will need to fund the lost income ( small as it may be) and file the 5330.

Thoughts.

Thanks

[RatherBeGolfing]

What kind of delay are you expecting?

Contributions are not late just because they are not deposited immediately IF there is a valid reason for the delay. So in other words, if the deposit is made as soon as possible during the payroll switch, you should be fine.

A few things to consider:

1. A delay can be reasonable if you are switching providers

2. The deposit should be made as soon as possible

3. The delay cannot be more than the 15th day of the month following segregation of assets, even if you have a reasonable cause for the delay.

Edit: A black out notice is not needed for the timing of the contributions, but may be needed if the switch also impacts the participants ability to direct their accounts.