401(k) Contribution Due Date - Over 100 Plan Participants

[Stash026]

I know for Plans with less than 100 people, the DOL requires contributions to be deposited within 7 business days of being withheld from payroll.

I have a multiple employer plan with more than 100 participants, though no single employer has more than 100 employees in the Plan.  So the question is:

• Does the employer need to make the contributions within 7 business days?
• Or, since the Plan as a whole over 100 participants does it fall under the 15th business day of the month following the month in which the amount was received by the employer (so if something was withheld on October 31, I guess that means it's due 11/15?)

Thanks everyone!

[RatherBeGolfing]

24 minutes ago, Stash026 said:

I know for Plans with less than 100 people, the DOL requires contributions to be deposited within 7 business days of being withheld from payroll.

Not quite. 

General rule:  participant assets be segregated from employer assets as of the earliest date on which such contributions or repayments can reasonably be segregated.  

Safe harbor: For plans with fewer than 100 participants, an amount deposited no later than the 7th business day following he day on which such amount is received by the employer will be deemed to to be contributed or repaid to such plan on the earliest date on which such contributions or participant loan repayments can reasonably be segregated from the employer's general assets.

In no event shall a date later than the 15th business day of the month following the month in which the participant contribution or participant loan repayment amounts are received be considered reasonable under the general rule.

[Jim Chad]

The DOL would say that the part of their regulations that count for Plans over 100 is the part that says  "As soon as reasonable" .  They think that payday is reasonable, with modern computers. 

The 15th business day of the following month is when they come for you with handcuffs.

 

[Stash026]

Is there a safe harbor for plans with over 100 participants then?  We have an employer that was definitely delinquent in their submission and are going to collect interest.  When would you calculate the interest from then?

[RatherBeGolfing]

13 minutes ago, Stash026 said:

Is there a safe harbor for plans with over 100 participants then? 

No. It is as soon as reasonable.  

EDIT: 100 or more.  Safe harbor is available for plans with less than 100 participants on the first day of the plan year.

13 minutes ago, Stash026 said:

We have an employer that was definitely delinquent in their submission and are going to collect interest.  When would you calculate the interest from then?

You calculate interest from the loss date.  If the deposit could have reasonably been made on pay day, that is the loss date.  

[BG5150]

So the rules are the same for a MEP with 5 adopters with 25 participants each?  They re all on the large plan schedule with no safe harbor?

[acm_acm]

On 11/16/2020 at 10:31 AM, Jim Chad said:

The DOL would say that the part of their regulations that count for Plans over 100 is the part that says  "As soon as reasonable" .  They think that payday is reasonable, with modern computers. 

The 15th business day of the following month is when they come for you with handcuffs.

 

Payday is when federal/state withholding, FICA, etc. are "segregated", no?  Then why not DC deferrals?

[RatherBeGolfing]

1 hour ago, acm_acm said:

Payday is when federal/state withholding, FICA, etc. are "segregated", no?

No.  It is segregated when it is no longer under the employers control. Like when you submit withheld taxes to the feds/state, or deposit contributions to the plan.

[acm_acm]

On 11/17/2020 at 2:51 PM, RatherBeGolfing said:

No.  It is segregated when it is no longer under the employers control. Like when you submit withheld taxes to the feds/state, or deposit contributions to the plan.

My understanding that withheld taxes are out of most employers' "control" nearly instantly when pushed through payroll. 

In any case, if the employer can send the money to go the IRS, they can put deferrals in the plan at the same time.