Benefits: participant contribution timing needs scrutiny.

• Author: Marshall, Jeffrey
• Position: Brief Article

One of the hot topics at the Employee Benefits Security Administration (EBSA) of the Department of Labor is the timely remittance of participant contributions. Regardless of materiality, failure to remit or untimely remittance of participant contributions is a prohibited transaction under the Employee Retirement Income Security Act (ERISA), notes Linda S. Cummings, director of quality control at accounting firm J.H. Cohn LLP. This is considered to be an extension of credit--unlawful financing, or the use of plan assets for the benefit of the employer. Determining exactly when the contributions are considered to be late is not always a simple matter, however, Cummings notes.

Participant contributions are considered to be plan assets as soon as they can be reasonably segregated from the employer's general assets, but not later than the 15th day of the...