Delinquent Plan Contribution Notice
(401(k) Plan)

Summary

This template letter notifies 401(k) plan participants that their employer was delinquent in contributing their contributions to the plan, and that the employer is correcting the delinquency under the Department of Labor's voluntary fiduciary correction program established by 71 Fed. Reg. 20,262 (April 19, 2006) (VFCP). This template includes practical guidance, drafting notes, and alternate and optional clauses. The need for a VFCP correction for this type of operational failure arises if the employer withholds salary reduction contributions from an employee's paycheck, receives other participant contributions to an ERISA retirement plan, or receives plan loan repayments, but fails to timely deposit these amounts in accordance with the timeframes set forth in 29 C.F.R. § 2510.3-102. Correcting the mistake will require (1) identifying the earliest date you could have segregated deferrals from general assets, (2) comparing that date with the actual deposit dates and any plan document requirements, and (3) depositing all elective deferrals withheld and earnings resulting from the late deposit into the plan’s trust. This template letter has been drafted to address delinquent payroll contributions in a 401(k) plan (i.e., 401(k) pre-tax contributions, Roth 401(k) contributions, and traditional after-tax contributions), with optional language addressing late deposits of participant loan repayments. See IRS, 401(k) Fix-It Guide. For additional discussion on the VFCP, see Voluntary Fiduciary Correction Program. For a discussion regarding the contribution timing rules under 29 C.F.R. § 2510.3-102, see ERISA Fiduciary Duties. For a full listing of key content covering EPCRS and VFCP plan corrections, see EPCRS and VFCP Plan Corrections Resource Kit For a full listing of key content covering ERISA retirement plan investments, see ERISA Retirement Plan Investment Resource Kit. For a full listing of key content covering retirement plan notification requirements, see ERISA Retirement Plan Notices Resource Kit.