Late Contribution Correction Question

[khn]

If a few payrolls from 2024 have been identified as late, is it correct that we only report the late ee deferrals on the 5500, but calculate earnings on both the late ee and er deferrals when processing the correction to make participants whole?

[Bri]

Does "er deferrals" mean the corresponding match?

[khn]

Yes, the employer match contributions. 

[Bri]

then yes, while the 5500 is asking about the late employee 401k amounts, but your actual corrective measures for the match include earnings on top as well.

[Cherry Park Advisory]

There are no “ER deferrals” — employee amounts are deferrals; employer amounts are usually match or nonelective contributions.

For the 5500, you generally report the late employee deferrals only.

For correction, you calculate lost earnings on the late employee deferrals. You’d only calculate lost earnings on the match if the match itself was actually late under the plan terms.

So: report EE deferrals on the 5500; review the match separately based on when it was due.
 

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