Posted: 3/13/2003 12:46:49 PM EDT
| How long does the employer have to make the employee contribution after deducting the money from the employee's check? Anyone know? |
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[url]http://www.401khelpcenter.com/participant_contributions.html[/url] The regulations require that participant contributions to a 401k be deposited to the plan on the earliest date that they can be reasonably segregated from the employer's general assets, but in no event later than the 15th business day of the month following the month in which the participant contributions are deducted from their pay. What this doesn’t mean is that they can wait until the 15th business day of the month following the month in which your contribution was deducted just for the convenience of doing so. The Department of Labor DEMANDS that if the employer can segregate and deposit the contributions into the plan prior to this deadline, IT MUST DO SO or face a fine. The DOL's position on plan assets has been made clear: funds must be deposited as soon as they can reasonably be segregated. The preamble to the DOL regulations specifically states that the 15th day of the following month is not a safe harbor, and thus "for many plans, participant contributions will become plan assets well in advance of the applicable maximum period." Also from the Department of Labor site, about half way down the page: [url]http://www.dol.gov/ebsa/FAQs/faq_compliance_pension.html[/url] When must employers deposit withheld employee contributions into a 401(k) plan or other pension plan? Employers must transmit employee contributions to pension plans as soon as they can reasonably be segregated from the employer’s general assets, but not later than the 15th business day of the month immediately after the month in which the contributions either were withheld or received by the employer. |