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Penalty Exposure to Untimely Deposit of Pension Withholdings - Immediate Action Employers are exposed to significant penalties if they fail to deposit participant contributions to a pension plan as soon as practical after such amounts have been withheld from wages. This exposure is increased as a result of an announcement by The Pension Welfare Benefits Administration of an enforcement initiative regarding the timeliness of remittance of participant contributions. In certain cases, such penalties may be assessed against stockholders of the employer.
It is, therefore, imperative that such withholdings from employee participants be deposited in the pension plan trust as soon as practical. There is a misconception that such deposits within 15 business days following the month in which the contributions were withheld from employee wages is a safe-harbor period. In fact, on audit, the Department of Labor has held in certain cases that deposits made beyond the 3rd day after withholding do not satisfy the timely deposit requirements and have assessed penalties.
Accordingly, deposits should be made immediately upon withholding. If you are not making deposits immediately upon withholding, or if you have any questions regarding this issue, please contact a Feeley & Driscoll tax partner at (617) 742-7788 or at mailto:info@fdcpa.com (where it will be forwarded to the appropriate partner).
To contact Feeley & Driscoll, please click here or call us at 1 (888) 875-9770. |
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