TIMELY DEPOSITS

What You Need to Know

When an employee decides to contribute money to How Do I Correct Late

their retirement plan, they are trusting their employer to
deposit their funds in a timely manner. If their contribution Contribution(s)?
is deposited untimely, the employee may have lost As soon as you realize your deposit is late, submit the
investment earnings on the amount that was deposited late contributions. PAi will assist you with the process of
late. If this occurs, the employer (as a fiduciary of the funding any earnings, paying the excise tax, filing a Form
plan), is at fault for not making a timely remittance. There 5330, and reporting the late contributions on the annual
are steps to correct and report this information to the Form 5500.
Internal Revenue Service (IRS).
1. Deposit the late contribution amount
• To reduce the amount of earnings and excise
01 02 03 04
tax owed, deposit the late contribution as

05 06 07 08 soon as possible.

2. Deposit earnings/report late deposits on annual

09 10 11 12 Year End Reporting Questionnaire
• If late contributions and earnings are funded
within the same plan year it occurred: You
What is Considered a Timely may be able to reduce correction costs by
Contribution? contacting PAi to have the earnings calculated
and deposited before the end of the plan year.
The IRS and Department of Labor (DOL) regulation states Once the Year End Reporting Questionnaire
that employers must deposit employee contributions is available, indicate all late deposits on the
(including loan payments) as soon as administratively Payroll Deductions screen.
possible. There is a myth that an employer has until the
• If late contributions and/or earnings are
15th business day of the following month to submit their
deposited after the end of the plan year
contribution. This comes from a rule that the deposit
it occurred: Once the Year End Reporting
should never occur after the 15th business day of the
Questionnaire is available, indicate all late
month following when it was withheld. The 15th business
deposits on the Payroll Deductions screen.
day of the following month is not the deadline; it is only
an outer limit of what is considered timely. The real 3. PAi assists with corrections
deadline to submit a contribution is as soon as
• If late deposits were indicated on the Payroll
administratively possible.
Deductions screen, PAi will contact you to walk
If a plan has under 100 participants, a special provision through the rest of the correction process after
allows employee contributions (including loan payments) the Year End Reporting Questionnaire has been
to be submitted within seven business days following submitted.
the payroll date. Even with this special provision, PAi
recommends to submit all employee contributions as soon NOTE: When correcting late contributions, in addition
as administratively possible. to funding the contribution, paying the earnings,
and paying the excise tax, PAi charges an hourly
NOTE: For plans covering only sole proprietors, fee for PAi to prepare the Form 5330. This fee is
partners, and sole shareholders of corporations disclosed within the PAi Fee Disclosure located on
(including spouses of such individuals) deferrals must your Employer Site, under Documents > Disclosures >
be deposited no later than 12 months after the close 408(b)(2) Notice.
of the plan year.

Revolutionizing retirement since 1983, PAi provides retirement savings solutions focused on participant outcomes to small businesses
nationwide. As an Ascensus company since 2022, we continue to focus on serving employers, their employees, and financial
representatives to create a better retirement for all.

CoPilot recordkeeping services include Years of Retirement calculations and savings alerts. Services for CoPilot are provided by Plan Administrators, Inc. (PAi), an Ascensus company.

1300 Enterprise Drive, P.O. Box 5250, De Pere, WI 54115 | 800.236.7400 | pai.com | Se Habla Español. 10/2022 | ER