On Jan 13, the U.S. Department of Labor (DOL) announced the publication of a final rule, which provides a safe harbor deadline for depositing employee contributions in small pension or welfare benefit plans with fewer than 100 participants. This deadline is the seventh business day following receipt or withholding by employers.
At present, employers of all sizes must transmit employee contributions to pension plans as soon as they can reasonably be segregated from the general assets of the employer, while no later than the 15th business day of the month following the month in which contributions are received or withheld by the employer. The latest date for forwarding participant contributions to health plans is 90 days from the date on which such amounts are received or withheld by the employer.
The final labor law rule amends the participant contribution rules to create a safe harbor period. Under this, if the participant contribution amounts are deposited with the plan within seven business days of receipt or withholding, they will be treated as complying with the law.
The final rule is consistent with the proposed rule. The department did not expand the safe harbor to cover plans with 100 or more participants due to a lack of information and data sufficient to evaluate current practices of such employers and assess the costs, benefits and risks to participants associated with extending the safe harbor to large plans.
Phyllis C. Borzi, assistant secretary of labor for the department's Employee Benefits Security Administration said "This rule will give employers greater clarity in remitting participant contributions to small pension and welfare plans in a timely manner…We estimate participant accounts could grow by $19 to $44 million as a result of these rules."