DOL Issues Final Safe Harbor Rule On Employee Contributions To Small Pension And Welfare Plans

The U.S. Department of Labor ("DOL") today announced the publication of a final rule to protect employee contributions deposited to small pension and welfare benefit plans with fewer than 100 participants by providing a "safe harbor" period of seven business days following receipt or withholding by employers. According to the head of DOL's Employee Benefits Security Administration ("EBSA"), the new rule "will give employers greater clarity in remitting participant contributions to small pension and welfare plans in a timely manner." According to DOL's guidance, employers of all sizes currently 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. Under current guidance, 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 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 seven business days of receipt or withholding. [For more information about this issue, please see www.dol.gov.]