Check the deposit of participant contributions against the segregation rule
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- From the payroll record and the deposit record, list each payday, the date participant contributions were taken from pay, the date they were deposited to the trust, and any shorter deposit date written in the plan document. Mark whether the plan has fewer than 100 participants. Do not decide that a deposit was timely, and do not calculate lost earnings.
- What the lawyer must review
- The lawyer decides whether the deposit met the Department of Labor timing rule and any shorter plan term. The Department's fiduciary adviser states that participant contributions must be deposited as soon as it is reasonably possible to segregate them from the employer's assets, and no later than the 15th business day of the month following the payday. If the employer can reasonably deposit sooner, it must do so. The 15th business day is not a safe harbour. The IRS fix-it guide states the same maximum, and states that the Department provides a 7-business-day safe harbour for employee contributions to plans with fewer than 100 participants. A plan term that sets an earlier deposit date must be followed. A late deposit of elective deferrals can be both a failure to follow the plan, corrected under the IRS correction program where that program applies, and a prohibited transaction. The guide states that the employer is a disqualified person, that the initial excise tax is 15 percent of the amount involved for each year, and that a further tax of 100 percent of the amount involved may apply if the transaction is not corrected. A prohibited transaction is not corrected under the IRS program. The Department's Voluntary Fiduciary Correction Program may be used. Matching and other employer contributions follow the deduction timing on the guide, not this deposit rule. The lawyer confirms the current correction procedure before a deposit is treated as late.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Potential support includes assembling provisional schedules. Confirm the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Verify the applicable jurisdiction and the version of each relevant law, rule or instrument in force at the material time.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.