Today's Federal Register contains the DOL's final regulation affecting the
time by which employee contributions must be made under a 401(k) plan and
other plans regulated by ERISA. The text of the regulation and the DOL's
preamble (which provides helpful background information and comments)
appears on BenefitsLink at

   https://benefitslink.com/erisaregs/403.html

The rules were issued in proposed format in December of last year.

The final regulation provides that participant contributions to employee
pension benefit plans become plan assets on the earliest date that they can
reasonably be segregated from the employer's general assets -- which is the
rule in the current regulation and was contained in the proposed regulation
-- but in no event later than the 15th business day of the month following
the month in which the participant contributions are withheld or received by
the employer. That "outer limit" is much more liberal for most employers
than the proposed regulation's outer limit of the time for depositing
withheld income taxes and employment taxes, but is shorter than the 90-day
outer limit provided in the current regulation.

Under a procedure in the final regulation, an employer may obtain an
extension of this maximum period for an additional 10 business days with
respect to participant pension contributions received or withheld in a
single month.

For employee welfare benefit plans, the final regulation leaves unchanged
the current regulation, which provides that participant contributions become
plan assets as of the earliest date on which they can reasonably be
segregated but in no event later than 90 days from the date on which the
participant contributions were received or withheld by the employer.

The regulation generally becomes effective on February 3, 1997. Until that
time, the 90-day outer limit for pension plans continues in effect.

The preamble also states that the final rules do not affect the continued
ability of cafeteria plan sponsors to rely on technical release T.R. 92-01,
which provides that the DOL will not assert a violation of the trust or
certain reporting requirements involving cafeteria plans solely because of a
failure to hold participant contributions in trust.

Dave Baker
erisa@benefitslink.com

BenefitsLink (national employee benefits Web site)
https://benefitslink.com