On January 14, the U.S. Department of Labor announced the publication of a final rule that will require employers with pension and welfare benefit plans with fewer than 100 participants to deposit participant contributions within 7 days of receiving them.
As explained in a Employee Benefits Security Administration (EBSA) press release, currently, 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 final rule amends the participant contribution rules to create a safe harbor period under which participant contributions to a small plan will be deemed to comply with the law if those amounts are deposited with the plan within 7 business days of receipt or withholding.
“This rule will give employers greater clarity in remitting participant contributions to small pension and welfare plans in a timely manner,” Phyllis C. Borzi, EBSA’s assistant secretary of labor said in the release. “We estimate participant accounts could grow by $19 to $44 million as a result of these rules.”
Here is a link to the final rule as published in the January 14 Federal Register: