While my main focus is qualified retirement plans, I try and stay up to date on what is happening in the world of welfare benefits, i.e., health plans, etc. After all, both types of benefit plans are subject to ERISA’s reporting, disclosure, and fiduciary rules. And both types, of course, are regulated in these areas by the Department of Labor (DoL). And so I found Roy Harmon’s post today on his Health Plan Law blog, EBSA "Targeting Criteria" Enhancements Lead to Large Enforcement Gains, of great relevance to my world of qualified retirement plans. EBSA is the Employee Benefit Security Administration which is that part of the DoL that is responsible for ERISA regulation and enforcement.

One of the targeting criteria that Mr. Harmon mentions is information received as a result of complaints from participants, fiduciaries, informants, or other sources in the community. The most common source of complaints is, I have observed, participants. The reason?  Their 401(k) contributions have not been timely deposited. Easily discovered in a 401(k) environment of daily recordkeeping with internet access.
 
The DoL takes the same view of late 401(k) deposits as the IRS does of late payroll tax deposits. Dim. "Timely" according to DoL regs requires that employee contributions be deposited in the 401(k) plan on the earliest date that they can reasonably be segregated from the employer’s general assets, but not later than the 15th business day of the month following withholding or receipt by employer. This has come to be known as the "15-day rule".

But there is no such rule. The DoL has taken the view in its audits that the deadline under the timely standard almost always occurs prior to the 15th day of the month following withholding. The deadline in almost every case has turned out to no more than one to two weeks following withholding and, in many cases, to be no more than a few days following withholding depending on the employer’s individual facts and circumstances, i.e., the manner in which payroll taxes are withheld.

And there is nothing that causes employee morale to fall through the floor quicker than late 401(k) deposits.