A news release from the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) said the protections would cover pension and welfare plans with fewer than 100 participants. According to EBSA, the proposal would set up a safe harbor period under which participant contributions to a small plan will be deemed to be legally compliant if put into the plan within seven business days from when they are received.
Assistant Secretary of Labor for EBSA, Bradford P. Campbell, said in the announcement that the department would not accuse a plan sponsor of an Employee Retirement Income Security Act (ERISA) violation while the proposal is being finalized if such employee contributions are deposited within the seven-day time limit.
“Our proposal will protect workers by encouraging employers to deposit participant contributions to small pension and welfare plans in a timely manner,” said Campbell, in the announcement. “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.
In addition to the small plan safe harbor proposal, EBSA also asked for 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.
The public may submit comments on the proposed rule electronically through www.regulations.gov or via e-mail to e-ORI@dol.gov. Comments on paper should be sent to the Office of Regulations and Interpretations, Employee Benefits Security Administration, Room N-5655, 200 Constitution Avenue, N.W., Washington, D.C. 20210, Attention: Participant Contribution Regulation Safe Harbor.
The proposal is to be published in the Federal Register on Friday.