If you want to know more about the Department of Labor’s (DOL) proposed “seven-day” rule on the timely deposit of employee contributions, you may want to read a recent article on the Plansponsor.com. (You will need to set up a username and password on that site, but the registration is free of charge.)

“The DOL apparently believes that small plans need more certainty with respect to…timely deposits of participant contributions,” says Stephen Saxon of the Groom Law Group, an employee benefits firm. “Plans with fewer than 100 participants would be deemed to comply with the plan-asset requirements when contributions are deposited with the plan no later than the seventh business day following the day on which such amount is received by the employer.”

An advantage of knowing about these proposed guidelines ahead of time is that you can adjust your processes to make the deposit of employee contributions timely enough to comply with the seven-day rule. As such, you will be protected from any negative repercussions. However, for plan sponsors who do not follow the guidelines once they are finalized, the results could be late interest penalties for the employer and possible tax penalties.

If you sponsor a NADART retirement plan, our staff can keep you abreast of such legislative changes and help you to understand how they impact you. Contact a NADART representative today at (800) 462-3278, ext. 7161 or by e-mail at nadart401k@nada.org. You may also complete our online Product Information Request Form for more information on our plans and plan features.