Timing Rules

Employee 401(k) and Roth contributions and loan payments must be deposited as soon as administratively feasible, or within 7 days after withholding from wages if the plan is small, or sooner if the plan is large.

Federal withholding of 20% is required on most cash distributions. If your company is responsible for this, the withholding must be deposited with the IRS by the 15th day of the following month in most cases.

Refunds to correct failed discrimination testing must be processed within 2.5 months following the close of the plan year, or the IRS charges a 10% penalty on the excess amount.

Employer contributions must be deposited before the filing due date of the company return, which is within 3.5 months of the company’s year end, or 8.5 months if extended for C corporations.

Minimum Required Distributions must be taken by owners, having more than 5% ownership, and by terminated or retired employees who are over age 70.5. The first distribution must be taken by April 1 of the year following the participant turning age 70.5. Each subsequent distribution must be taken by December 31st.

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