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401K Deposits
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401K Deposits
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If we deposit 401K withholdings within 5 business, would this be considered a late deposit and be subject to the voluntary fiduciary correction program? Thank you.
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401K Deposits

posted at 7/21/2010 4:59 AM EDT
Posts: 92
First: 2/4/2002
Last: 3/28/2011
If we deposit 401K withholdings within 5 business, would this be considered a late deposit and be subject to the voluntary fiduciary correction program?

Thank you.
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401K Deposits

posted at 7/21/2010 5:46 AM EDT
Posts: 2146
First: 2/15/2006
Last: 9/14/2011
Here's a good article although a bit dated that states a 7 day grace period based on information out of audits: http://www.401khelpcenter.com/401k/perdue_401k_deposits.html But as we all know, just because the DOL/IRS say it's okay under one set of facts and circumstances does not mean it is okay under all circumstances. It really will be company/plan dependent.

But honestly, I suspect if you were audited that you would would need a very good reason/procedure as to why it takes 5 days. With all the technology available and with most companies running payroll in arrears, I don't see how it could be overly complicated to get deposits to the provider on a much timelier basis than 5 days.
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401K Deposits

posted at 7/21/2010 10:48 AM EDT
Posts: 92
First: 2/4/2002
Last: 3/28/2011
There were 3 instances in 2009 when deposits were made in 5 days. All other deposits were made in less than 3 days. I was the DOL provided a more clear interpretation as to what the rules are.
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401K Deposits

posted at 7/21/2010 11:58 AM EDT
Posts: 2146
First: 2/15/2006
Last: 9/14/2011
I guess if I were an auditor, I would ask what happened on those three incidents that made them different? Was there a specific reason (holiday, etc) that they didn't happen in the normal timing process? Is it the same reason each of the three times? What could you do to make sure it isn't repeated?

If there is a plausible answer, I don't think you would get fined. But my thoughts aren't worth diddly when it comes to how the DOL would decide.
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