Interviews
DOL announces greater protection rule for employees
07 Mar '08
2 min read
The U.S. Department of Labor (DOL) announced a proposed rule to provide greater protection for employee contributions deposited to pension and welfare benefit plans with fewer than 100 participants by proposing a safe harbor period of seven business days following receipt or withholding by employers.
"Our proposal will protect workers by encouraging employers to deposit participant contributions to small pension and welfare plans in a timely manner," said Assistant Secretary of Labor for the Employee Benefits Security Administration Bradford P. Campbell. "It also will provide employers with a higher degree of compliance certainty."
Under the current rules, 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, but 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 proposed rule would amend the participant contribution rules by creating a safe harbor period under which participant contributions to a small plan will be deemed to be made in compliance with the law if those amounts are deposited with the plan within seven business days of receipt or withholding.
Before the effective date of the final regulation, the department will not assert a violation of the Employee Retirement Income Security Act regarding participant contributions where such contributions are deposited with small plans within the seven business day safe harbor period.
In addition, the department requests information and data regarding a possible safe harbor for plans with 100 or more participants to enable it to evaluate the current contribution practices of these large employers.
"Our proposal will protect workers by encouraging employers to deposit participant contributions to small pension and welfare plans in a timely manner," said Assistant Secretary of Labor for the Employee Benefits Security Administration Bradford P. Campbell. "It also will provide employers with a higher degree of compliance certainty."
Under the current rules, 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, but 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 proposed rule would amend the participant contribution rules by creating a safe harbor period under which participant contributions to a small plan will be deemed to be made in compliance with the law if those amounts are deposited with the plan within seven business days of receipt or withholding.
Before the effective date of the final regulation, the department will not assert a violation of the Employee Retirement Income Security Act regarding participant contributions where such contributions are deposited with small plans within the seven business day safe harbor period.
In addition, the department requests information and data regarding a possible safe harbor for plans with 100 or more participants to enable it to evaluate the current contribution practices of these large employers.
U.S. Department of Labor
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