“I get confused by the various deposit deadlines for employee salary deferrals. Can you summarize them for me, please?”
ERISA consultants at the Retirement Learning Center (RLC) Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings and income plans, including nonqualified plans, stock options, and Social Security and Medicare. We bring Case of the Week to you to highlight the most relevant topics affecting your business. A recent call with a financial advisor from North Carolina is representative of a common inquiry related to depositing employee salary deferrals.
Highlights of the Discussion
The following table summarizes the Department of Labor’s (DOL’s) deferral deposit deadlines for various plan types.
|Small 401(k) Plan
A plan with fewer than 100 participants
|Safe Harbor Rule: The plan sponsor has seven business days following the day on which such amounts were withheld to deposit them to the plan.||DOL Reg. 2510-3-102(a)(2)
|Large 401(k) Plan
A plan with 100 or more participants
|The plan sponsor must deposit deferrals as soon as they can be reasonably segregated from the employer’s assets, but not later than 15 business days following the month the deferrals are withheld from the participants’ pay.||DOL Reg. 2510-3-102(a)(1) and (b)(1)
|Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA||Deferrals must be deposited within 30 days after the end of the month in which the amounts would otherwise have been payable to the employee.||DOL Reg. 2510.3-102(b)(2)
|Salary Reduction Simplified Employee Pension (SAR-SEP)
An IRA-based plan with 25 or fewer employees.
|Safe Harbor Rule: The plan sponsor has seven business days following the day on which such amounts were withheld to deposit them to the plan.||DOL Reg. 2510-3-102(a)(2)|
The DOL’s top compliance concern is the timely deposit of employee salary deferrals to their respective plans. Plan sponsors and service providers must ensure policies and procedures are in place to ensure deferral deposit deadlines are met.