Deferral deposits made late for a plan covering owners and children

Hi

A 401k plan covering owner/spouse and their children. All HCE/key. All receive one paycheck end of year.

They received the 2020 salaries end of December 2020 with the deferrals reflected on them.

Just found out that, they are depositing the deferrals now.

Do they need the VFCP adjustment? I think they do as I see no exception but not a 401k expert.

Thank you

I know it is a stupid question but any takers?

Why not just contribute the missed earnings for themselves and pay the naturally dinky 5330 tax?  (This might not even be a Title I plan, right?)

Why the 5330 tax?

I believe it is Title I but let's see what others will say.

As far as I know there is no exception for owners and their families.

The law doesn't seem to be there to protect participants, but to dissuade companies from using what should be plan assets for its own use.

1 hour ago, BG5150 said:

The law doesn't seem to be there to protect participants, but to dissuade companies from using what should be plan assets for its own use.

Seconded. This isn't a nondiscrimination issue where key/HCE status is relevant; the late deposit is a prohibited transaction between the sponsor and the plan regardless of which participant the plan assets in question are earmarked for.

Thank you all