Failure to timely deposit deferrals
Top 10 retirement plan internal control pitfalls #2
The Department of Labor focuses on this issue; the expectation under Employee Retirement Income Security Act and related regulations is that plan sponsors must make deposits on a prompt basis. For smaller plans (under 100 participants), there is a safe harbor guideline that allows seven days for money to be deposited into the plan. The expectation for larger plans is that deposits are done within three days. If it can be done sooner, it is expected to be done that way every time.
The rule applies to elective deferrals, loan repayments and participant voluntary contributions. There may be an excise tax that needs to be paid if there is a violation.