Plan Limitations

Employee Contribution Deposit Requirements

 

Elective deferrals, after-tax contributions, and participant loan payments must be deposited within 7 days after being withheld from the employee’s paycheck. If deposits are not made within this DOL safe harbor time frame, the deposits are considered late and the IRS/DOL considers them a prohibited transaction. Form 5330 must be filed and a 15% excise tax on the use of the money must be paid until all deposits are made, including interest. 

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Employer Contribution Deposit Requirements

 

For tax deduction purposes, employer contributions must be deposited by the due date (including valid extensions) of the filing of the employer’s federal income tax return.

 

For minimum funding purposes, required contributions must be deposited within 8½ months after the end of the plan year.