The Employee Benefits Security Administration is encouraging sponsors of small benefit plans to put employee contributions into the plans within 7 days of receiving payments or withholding money from paychecks.
The final rule creates a safe harbor for pension and welfare benefit plans with fewer than 100 participants. The plans can take advantage of the safe harbor if they deposit employees' contributions within 7 business days.
Encouraging timely deposits could increase total participant assets by $19 million to $44 million, according to Phyllis Borzi, the official in charge of EBSA.
Current rules require employers of all sizes to "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," officials say.
The latest date for forwarding participant contributions to health plans is 90 days from the date on which the amounts are received or withheld.
The final rule is set to appear in the Federal Register Thursday and will take effect that day.
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