The Department of Labor ("DOL") recently proposed new regulations addressing when participant withholdings would become "plan assets."
The present regulations provide that all participant contributions either paid to an employer or deducted from payroll must be deposited in a plan account the earliest date such amounts can reasonably be segregated from the employer's general assets, but in any event, no later than:
- For retirement plans, the 15th business day of the month following the month in which the employer received the payment from the participant or would have otherwise paid the amount in cash to the participant; or
- For welfare plans, 90 days after the employer receives or withheld the amount.
The DOL has now proposed a new "safe harbor" provision regarding depositing funds into the plan. Plans with 100 or fewer participants at the beginning of the plan year will satisfy the rules as long as amounts are deposited with the plan no later than the seventh business day after the day the receipts or withholdings are received.
