Do late deferrals need earnings adjustment if only one or two months late?

Background

403(b)(9) non-electing church plan

The employer did not send in May and June (2023) employee deferral contributions timely. 

The deferrals were deposited to the plan in mid-August 2023.

Question

I was looking through RP-2021-30, .05(9) that states: 

Safe harbor correction methods for Employee Elective Deferral Failures in §401(k) plans or § 403(b) Plans. (a) Safe harbor correction method for Employee Elective Deferral Failures that do not exceed three months. Under this safe harbor correction method, an Employee Elective Deferral Failure (as defined in section .05(10)) can be corrected without a QNEC for missed elective deferrals... [if the stated conditions are satisfied]

Are late deferrals that were deducted but not sent timely to the plan included in .05(10)? I did not notice them explicitly mentioned so I thought I would tap into the wisdom abound on this site! : D

It will be a sizeable correction if there is a need to adjust for earnings, so I want to be sure there is not a safe harbor "out" before the process is started.  TIA

No, that section of the Rev. Proc. is addressing the failure to deduct the money out of the paycheck, rather than the failure to send the money to the trust.

@Bri Thank you. That is how I understood it. I was really hoping I had it wrong 🙃

But a non-electing church plan is not subject to ERISA, so the usual ASAP deposit rule and the 7-day deposit rules are not applicable. Unless the plan document requires the deposit to be done that quickly. Check your plan document. 

That a church plan is not ERISA-governed does not mean no fiduciary law applies.

As John Feldt suggests, consider:

the plan’s governing documents;

the wage-deduction agreement’s express and implied terms;

a provision implied by interpreting a gap or ambiguity to favor a provision needed for the plan to get § 403(b) tax treatment;

the church’s internal law, which might provide a church employer’s responsibilities or a worker’s rights beyond those the plan provides;

State law, at least of the State the governing documents specify as the plan’s governing law and, if no choice is specified or the choice’s effect is doubtful, the law of each State that arguably might govern the plan or a participant’s rights.

each applicable State’s wage-payment law, which might set up, expressly or impliedly, a wage payer’s responsibility to apply promptly a wage deduction the worker authorized.

Under the common law of trusts, agency, and other fiduciary relationships, one will find a duty to invest or apply reasonably promptly the relationship’s assets.

Thank you everyone for your replies. The plan uses the IRS language around getting funds to the plan in reasonable time for proper administration and that an example of reasonable is 15 business days (paraphrasing). The employer had always got the funds to the plan before the end of this "reasonable time frame". With funds being one and two months late, I do not believe the plan would consider that "reasonable".