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The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers. Here’s the question of the day.
Question: What is the deadline for an employer to deposit employees’ contributions into their SIMPLE plan accounts?
Answer: The deadline for depositing employee deferral is the end of the month following the month in which the employee, but for the deferral, would have been paid the compensation in cash.
The deadline for employer contributions is the due date for the return for the year in question, including extensions.
From the Department of Labor’s website (http://www.dol.gov/ebsa/pdf/simpleIRA.pdf):
Depositing and Investing Plan Contributions
Employee contributions must be deposited in the financial institution serving as trustee for the plan within 30 days after the end of the month in which the amounts would otherwise have been payable to the employee in cash. Your employer contributions must be made by the due date (including extensions) for filing your business’s Federal income tax return for the year.
Failure to deposit employee deferrals on a timely basis is a serious issue for the employer, akin to failing to deposit employee payroll tax deposits in a timely manner.
If timely deposits were not made, the IRS has instructions for how an employer can self-report and address the mistake. Here’s a link to a description of the overview: http://www.irs.gov/pub/irs-tege/simple_fixit_guide.pdf. See item 7.
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