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.
Since 1996, the general rule has been that participant contributions become plan assets on the earliest date on which the contributions can reasonably be segregated from the employer’s general assets, subject to certain maximum time periods. For pension plans, the maximum time period is no later than the 15th business day of the month following the month in which the amount was received by the employer or would otherwise have been payable to the employee in cash. For welfare plans, the maximum period is 90 days from the date of receipt or withholding. If contributions are not timely deposited, then the employer can be subject to fiduciary liability under ERISA for any losses or interest on those amounts over the period of the delay.
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