Q&A: When to remit money for employees' 401(k) plans

December 5, 2008

Can I alter the frequency of when to remit money that is withheld from our employees' paychecks for the company 401(k) plan?

Q: Can I alter the frequency of when to remit money that is withheld from our employees' paychecks for the company 401(k) plan? Currently, it is remitted each month.

A: Under new rules, you must remit the withheld amounts within seven days of each payday. For example, if payday is the first of the month, funds must be deposited into the plan by the eighth of the month. If there is a plan audit, the IRS will review the timeliness of deposits, and the plan will be fined if payments are not remitted in a timely manner. While there are strict rules for depositing employee-withheld contributions, profit-sharing plan contributions can still be made at any time up until the due date of the employer's tax return, including extensions.