The most important part is over: making sure that the employee has their 401(k) contributions and earnings in the plan. I remitted my employee 401(k) contributions and earnings. You can consult your plan advisor, your third-party plan administrator, or visit the Department of Labor’s (DOL)website and use their Voluntary Fiduciary Correction Program Online Calculatorto ensure that the error is fixed correctly. For any earnings thereon, employers should calculate how much the employees would have been entitled to earn on their 401(k) contribution. The late contribution is easy enough: remit the money which was not deposited on time, as soon as you can. This involves two steps: the late contribution, and any earnings thereon. The IRS rules allow for employers to “fix” the error through self-correction. What do I do if I did not remit my employee 401(k) contributions timely? For businesses with less than 100 participants, the IRS allows a Safe Harbor rule for remittance within 7 business days. The IRS advises (and often penalizes employers) employers remit this money as soon as possible – ideally within 2-3 days of payday or as soon as administratively feasible. But for the IRS, the outer limit is just that: an outer limit. The IRS does not have a conclusive definition of timeliness however, the outer limit, according to the IRS, is the 15 th business day of the month after contributions were withheld. Employers who do not remit contributions timely are denying employees the chance to earn money for retirement, and since the employer carries the fiduciary responsibility of remitting contributions to the plan, the employer is at fault for not remitting on time. It is especially important to remit timely because plan assets, largely comprised of employee contributions, earn money in the open market depending on the type of assets in which the participant chooses to invest. When employers remit employee contributions to the plan, employees are trusting that the employer do so timely. Why is it important to remit timely?Įmployees choose how much money they would like to put in their retirement plan as long as it follows the retirement plan adoption agreement. If employers do not remit employee 401(k) contributions on time, the IRS requires businesses to take additional steps to correct and disclose this information. Employees normally contribute to their individual retirement funds through payroll deductions each pay date. Late employee 401(k) contribution remittances to a retirement plan can pose a major problem to employers. Are you late on your employee 401(k) contribution remittances?
0 kommentar(er)
