How long can an employer hold employee contributions before paying the

[Guest lawdawg]

I understand that for ERISA covered plans, employee contributions must be paid to the plan within a certain period of time (as soon as they can be reasonably segregated etc...). However, for a non-ERISA 403(B) plan, is there any time limit for employee contributions to be paid over to the plan. For example, is there potential liability if the employer holds the money for 30 days before turning it over? Are there any state or federal laws that could apply?

[MWeddell]

I don't know of any deadline for non-ERISA 403(B) programs.

Note that if there's a really extreme wait before the money is forwarded that the DOL might argue that holding onto this money is in effect giving the employer compensation and might accidentally convert this into an ERISA 403(B) plan.

[Everett Moreland]

The following from IRS Notice 98-8 indicates that the "trust" requirement for 403(B) annuity contracts and custodial accounts could be violated by an excessive wait:

"In order to satisfy the requirement that all plan assets and income be held in trust, amounts deferred under a governmental section 457(B) plan after a trust has been established must be transferred to the trust within a period that is not longer than is reasonable for the proper administration of the accounts of participants. For purposes of this requirement, a governmental section 457(B) plan may provide for amounts deferred for a participant under the plan to be transferred to the trust within a specified period after the date the amounts would otherwise have been paid to the participant. For example, a governmental section 457(B) plan could provide for amounts deferred under the plan to be contributed to the trust within 15 business days following the month in which these amounts would otherwise have been paid to the participant."