Retirement Contributions Recorded but Not Deposited

Determine the type of contribution, actual deposit date and applicable plan and tax deadlines. An accounting accrual is not proof that funding occurred, and employee deferrals need separate attention.

A business-owner scenario

A company records an employer contribution at year-end but cash never reaches the plan. Separately, employee deferrals were withheld from payroll. The two categories should not be lumped together under one unpaid retirement liability.

Illustrative scenario, not a client result.

Work through the transaction

Separate employee withholding from employer contributions.
Reconcile payroll, trustee deposits and general ledger.
Have the administrator identify funding and correction requirements.

The mistake that changes the result

Treating withheld employee money as available business cash can create obligations beyond the income-tax deduction question.

Records that resolve the question

Payroll registers.
Trust statements.
Contribution authorization.
Filed return and extension dates.

The decision to document

Request immediate reconciliation with the plan provider and appropriate benefits counsel. The tax preparer should use the confirmed funding facts and coordinate any return correction after the plan issue is assessed.

Which fact changes the answer?

A tax return prepared on the assumption of later employer funding needs follow-through evidence. Withheld employee amounts create another issue that should be escalated promptly. Reconcile the categories before deciding which provider or correction process is responsible.

Explore owner retirement commitments advisory · Discuss your situation with AE Tax Advisors

Sources and scope

General educational information prepared with AI assistance. No individual professional review is represented. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.

My books show a retirement contribution, but the money was never sent. Is it deductible?