Your 401(k) + Pension Experts

As a plan sponsor, it’s your responsibility to ensure employee elective deferrals and loan repayments are deposited into your retirement plan as soon as possible after each payroll. It might seem like a small detail, but late deposits can lead to compliance issues, IRS penalties, and unhappy employees. When must elective deferrals & loan payments be deposited? The Department of Labor (DOL) requires that these amounts be deposited as soon as administratively feasible following payday — and no later than the 15th business day of the following month. But here’s the catch: that 15-day window is not a safe harbor. In most cases, timely deposit means within a few business days — often within 1-3 days — depending on your company’s payroll practices. For small employers (under 100 participants), the DOL offers a safe harbor: if deferrals are deposited within 7 business days, they’re considered timely. For larger employers, there’s no such grace period. Why is this important? Late deposits are treated as prohibited transactions and could result in: · Excise taxes to the IRS (paid with Form 5330) · Corrective filings with the DOL · Required lost earnings reimbursements And don’t forget — the DOL audits this closely. Late or inconsistent deposits can raise red flags.  Tips to stay compliant: · Establish a consistent deposit schedule – Tie deposits to your payroll cycle and stick to it. · Automate where possible – Use payroll providers that offer direct integration with your plan’s recordkeeper. · Document everything – Keep a record of when deferrals are withheld and when they’re deposited. · Train your payroll team – Make sure they understand the importance of timing and the consequences of delays. Need help reviewing your deposit process? Contact us today — we’re here to support you.

What is a “QSLP,” and should you implement this new provision in your Plan?