Late Employer Contribution to 401(k) Plan

          I have a 401(k) Plan that had a required contribution of about $55,000 for Plan Year 2020. This required contribution didn't get deposited until 4/22/22. Given the pandemic and a downturn in business, even though the client wanted to make this contribution in a timely manner, the soonest they were able to make the deposit was late this past April. I would like to hear from someone who has had a client in the same situation (as I am sure that this has got to be a somewhat common situation) and what they did about it. Also, if the IRS got involved, what relief were they willing to give.

Thanks for the help

What is the nature of the required employer contribution? Money Purchase, Safe Harbor NEC, Safe Harbor Match, Fixed employer match by document, top-heavy minimum or other?

Since you are correcting withing 2 years of the failure it may be insignificant and available for self-correction (I'm not sure on this so check the most recent EPCRS procedure), similar to a late 401(k) deposit if it is considered "insignificant". If not I think you are looking at a VCP submission where the IRS is going to want to see you've corrected the missing contribution (with earnings). I think if you do that the IRS is likely to be very reasonable, especially in light of the pandemic.

The required contributions consist of a 3% Safe Harbor and a matching contribution.

Check Revenue Procedure 2021-30. I don't think your case falls into on that is specifically addressed but I do think you fall into an Operational Failure than the can be corrected under Self Correction under the Rev Proc if you follow the timing in 9.02 which it seems you have (assuming you've credited lost earnings for the late deposit). Though I'm not an attorney so you should probably run it by ERISA counsel before making a final recommendation to the client.