Don’t Make This Costly Mistake with Your Employee Retirement Plan

Employers that offer their employees a qualified retirement plan, such as a 401(k), are required to follow IRS Form 5500 regulations. These are mandated under the federal Employee Retirement Income Security Act (ERISA), and meant to ensure that employer-sponsored retirement plans follow procedures that protect the rights and benefits of plan participants.

Among the many Form 5500 regulations, plan sponsors must deposit employees’ salary or wage deferrals into their accounts as soon as administratively feasible, but no later than the 15th business day of the month following the month in which the contributions occurred. Essentially, a plan is required to make those deposits at the earliest reasonable date that it can segregate participant contributions from the employer’s general assets, which must be no later than the 15th business day of the month following when those deferrals were taken from employees’ paychecks.


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