When must employee monies deducted from the paycheck be deposited?
The Department of Labor requires that you deposit employee monies within 7 business days after each pay period. Any late deposits must be reported on the Plan’s 5500 each year and will subject your plan to audit, interest and penalties. See the attached for more details. Note that if you intend to make or maximize your deferrals, you must do so by no later than the last paycheck of the plan year. (Your plan document can permit you to deposit matching or profit sharing contributions as late as the due date of your company’s income tax return, plus extension.) How do 401(k) contributions deducted from the participant’s paycheck affect tax withholding? Pre-tax (i.e. non-Roth) 401(k) deferrals reduce the participant’s wages for purposes of federal tax withholding. They do not reduce a participant’s social security or unemployment wages. What is the maximum compensation that is recognized for plan purposes? Compensation (or earned income for the self employed) in excess of $245,000 in 2009
