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When participant deferrals must be deposited to the 401(k) plan trust

Under Department of Labor (DOL) guidance, 401(k) plan deferrals must be deposited on the earliest date the funds can reasonably be separated from the employer’s general assets.

However, the deposit should never occur later than the 15th business day of the month following the withholding of the employee’s wages. For example, if the contribution is withheld for the June 15th pay period, the deposit should occur no later than the 15th business day in July.

While the word “reasonably” is not defined under federal law or guidance for purposes of determining whether a deposit of deferrals has been made timely, the DOL rules described above indicate that it is never reasonable for such a deposit to fail to be made by the 15th business day of the month following the withholding of the employee’s wages.

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