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5500 Preparer's Manual for 2012 Plan Years

5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.


Proposed regs would provide 7-day safe harbor for contributions to small plans

The Employee Benefits Security Administration (EBSA) has issued proposed regulations, applicable primarily to defined contribution plans with fewer than 100 participants, that would provide a seven-business-day safe harbor period for employers to remit contributions from participants into retirement plans.

“Our proposal will protect workers by encouraging employers to deposit participant contributions to small pension and welfare plans in a timely manner,” Bradford P. Campbell, Assistant Secretary of Labor for EBSA said. “It also will provide employers with a higher degree of compliance certainty,” he added.

Compliance uncertainty under current rules

Under the existing rules, employers are obligated to transfer participant contributions into plans by the earliest date on which such contributions can reasonably be segregated from the employer’s general assets, but in no event later than the 15th business day of the month following the month in which participant contributions are received by the employer or withheld from a participant’s wages.

According to EBSA, there has been continued confusion on the part of plan sponsors as to whether their remittances of participant contributions into plans were compliant with the rules, or left the employer subject to the penalty for violating ERISA’s requirements governing the holding of plan assets. The vast majority of applications under the Voluntary Fiduciary Correction Program (VFCP), nearly 90%, involve delinquent employee contribution violations, EBSA notes.

Safe harbor to help small plans with compliance certainty

In order to provide plan sponsors with greater certainty regarding the timeliness of deposits of participant contributions into plans, EBSA is proposing a safe harbor under which participant contributions will be considered to have been deposited with the plan in a timely fashion when such contributions are deposited within seven business days from the date the funds are received or withheld from the participant. (The proposal would also amend the regulations to explicitly subject repayments of participant loans to the same rules as other participant contributions, for plans with less than 100 participants.)

As under the current rules, participant contributions will be considered deposited when placed in an account of the plan, without regard to whether the contributed amounts have been allocated to specific participants or investments of such participants. The proposed safe harbor would be available for both participant contributions to pension benefit plans and to welfare benefit plans.

Before the effective date of the final regulations, the DOL will refrain from asserting an ERISA violation regarding the timeliness of plan contributions for plans with less than 100 participants, as long as such contributions are transferred to the plan in accordance with the seven-business-day safe harbor period of the proposed regulations.

Comments regarding larger plans sought

At this time, EBSA’s position is that plans with more than 100 participants have less need for a safe harbor than do plans with less than 100 participants. However, EBSA states, the final version of the regulations may contain a safe harbor for larger plans if commenters provide information and data sufficient to conclude that there would be a net benefit to such employers and participants to have a safe harbor.

Written comments must be received by April 29, 2008 and directed to: Office of Regulations and Interpretations, Employee Benefits Security Administration, Room N–5655, U.S. Department of Labor, 200 Constitution Avenue, NW, Washington, DC 20210, Attn: Participant Contribution; or at website; or by e-mail to