Employee Benefit Plans: The 411

Valuable Information on 401ks, Pensions, ESOPs, Form 5500 Preparation + More

Reporting of Late Participant Contributions

Employers are reminded of the importance of remitting participant elective deferrals to employee benefit plans as soon as they can be segregated from the employer’s general assets. In the event this has not occurred at any point during the plan year, resulting in late contributions, the total amount of the delinquent contributions must be reported on Line 4a of Schedule H to the plan’s Form 5500.

This reporting does not end in the year of the late contributions. Employers must carry over and report again late contributions on Line 4a for each subsequent year until the year after the violation has been fully corrected, which correction includes payment of the late contributions and reimbursement of the plan for lost earnings and profits. For example, if an employer failed to remit participant contributions timely in 2009 in the amount of $500, which is subsequently corrected in 2010, the $500 of late contributions will need to be reported on both the 2009 and 2010 Form 5500.

Jonathan Poppel, CPA