Since 1988, the U.S. Department of Labor has imposed requirements as to the timing of the deposit of benefit plan employee contributionswage withholdings to the account of the applicable employee benefit plan.
On January 14, 2010, the U.S. Department of Labor (DOL) issued final regulations establishing a seven-day optional “safe harbor” period in which employers may remit participant contributions to certain ERISA-covered plans with fewer than 100 participants (small plans).
The timing of when participant contributions become plan assets poses important liability issues for plan sponsors.
On January 14, the U.S. Department of Labor (DOL) published a final regulation on when participant contributions - amounts an employer has received from its employees or withheld from wages for contribution to an employee benefit plan - become “plan assets” subject to ERISA.
Under current plan contribution rules, all employers (regardless of size) must transmit participant contributions to a pension plan as soon as the participant contributions can reasonably be segregated from the general assets of the employer, but in no event later than the fifteenth (15th) business day of the month following the month in which contributions are received or withheld from the participant.
Participant contributions to certain ERISA plans must be deposited with the plan on the earliest date on which they can reasonably be segregated from the employer’s general assets.
On February 29, 2008, the U.S. Department of Labor (“DOL”) proposed a new safe harbor, limited to small plans, under its regulation governing when participant contributions become “plan assets” for ERISA purposes.