Department of Labor reviewing timely remittance of participant contributions by Employee Benefit Plans. (regulatory matters).
Both pre-tax (salary deferral) and after-tax contributions to qualified pension plans must be held in trust as soon as they are deemed to be plan assets. DOL regulations require that these contributions be considered plan assets as of the earliest date they can reasonably be segregated from the general assets of the company. That date can be no later than 15 business days after the end of the month in which the participant contributions are withheld or received by the employer. Some employers believe the 15 business-day provision is a safe harbor rule on such transmittals, and that they have until the 15th business day after the month in which the amounts were withheld from the paychecks. However, there is no safe harbor. The employer must transmit the amounts to the plan as soon as they can be reasonably segregated from the employee's paycheck. Failure to remit or untimely remittance of participant contributions may constitute a prohibited transaction (either a use of plan assets for the benefit of the employer or a prohibited extension of credit) and, in certain circumstances, may constitute embezzlement of plan assets.
|Printer friendly Cite/link Email Feedback|
|Article Type:||Brief Article|
|Date:||Oct 1, 2001|
|Previous Article:||ERISA compliance guidance. (just in ...).|
|Next Article:||Employment liability program recently introduced. (member news).|