Employers would be allowed to self-correct — and self-report — mistakes in retirement plan contributions under a proposal made Monday.
The program would enable employers and other plan officials to notify the U.S. Department of Labor that they have self-corrected certain failures to send employee salary withholding contributions or participant loan repayments to retirement plans in a timely manner, according to a statement from the agency.
Some limits would apply; among other things, businesses could only use the program for lost earnings under $1,000.
The proposal is a “welcome development” for employers, said Avi Bernstein, senior counsel at management-side firm Epstein Becker Green.
The contribution or repayment delays that would be eligible for the program aren’t completely infrequent, he said, and often stem from the challenges posed by a special event payroll or processing an item off cycle, he said.
Employers already must disclose such failings, but the proposal streamlines the process and “reduces the paperwork significantly,” Bernstein said.
Stakeholders may comment until Jan. 20, 2023. Bernstein said he views the move as a positive one for the business community; if anything, employers — especially large ones — may want to see the $1,000 limit increased slightly, he said.