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ERISA experts? 403b plan at employer
Posted: Wed Oct 19, 2011 4:02 pm
by Chrisfs
Hi all,
I am suspecting my employer of delaying 403(b) contributions, by using them as a sort of short term loan, to smooth out cash flow before sending them to the plan a time later (sometimes as long as a few weeks). I am pretty sure this is illegal and have found an 'anti-inurement' section of ERISA, but don't have more direct cites that this is clearly wrong. Is there an ERISA or benefits expects hanging out here that could help me out ?
Re: ERISA experts? 403b plan at employer
Posted: Wed Oct 19, 2011 4:31 pm
by Pottapaug1938
I had to think about this for a bit, because I haven't been in the Defined Contributions side of my company for six years; but I have the answer for you:
http://www.retirementplanblog.com/403b- ... tions.html
To summarize:
The Department of Labor, which oversees this matter, requires that for “large plans” (those with 100 or more participants) employee contributions must be transmitted to the investment provider by the earlier of 15 business days following the month in which the amount was withheld from the employee's pay, or the earliest date on which it is administratively feasible to remit the contributions. Employee contributions to a "small" retirement plan (one with less that 100 participants) will be deemed to be made in compliance with the law if those amounts are deposited with the plan within 7 business days of receipt or withholding.
Re: ERISA experts? 403b plan at employer
Posted: Wed Oct 19, 2011 6:56 pm
by Chrisfs
Thanks,
I also found something related which would seem to say that even if you met the deadlines timewise, it's illegal for employers to use the money to float themselves a loan.
http://www.dol.gov/ebsa/publications/fi ... ility.html
Are There Some Transactions That Are Prohibited? Is There A Way To Make Them Permissible If The Actions Will Benefit The Plan?
Certain transactions are prohibited under the law to prevent dealings with parties who may be in a position to exercise improper influence over the plan. In addition, fiduciaries are prohibited from engaging in self-dealing and must avoid conflicts of interest that could harm the plan.
Prohibited Transactions
Who is prohibited from doing business with the plan? Prohibited parties (called parties in interest) include the employer, the union, plan fiduciaries, service providers, and statutorily defined owners, officers, and relatives of parties in interest.
Some of the prohibited transactions are:
* A sale, exchange, or lease between the plan and party in interest;
* Lending money or other extension of credit between the plan and party in interest; and
* Furnishing goods, services, or facilities between the plan and party in interest.
Other prohibitions relate solely to fiduciaries who use the plan’s assets in their own interest or who act on both sides of a transaction involving a plan. Fiduciaries cannot receive money or any other consideration for their personal account from any party doing business with the plan related to that business.
Re: ERISA experts? 403b plan at employer
Posted: Wed Oct 19, 2011 11:48 pm
by add2cart
Aren't 403(b) plans generally for public school employees, employees of tax-exempt organizations and ministers? Church plans can "opt out" of ERISA regs, just FYI. Or they used to be able to when I was familiar with that area long, long ago.
But, just in case, call the DOL:
http://www.dol.gov/ebsa/erisa_enforcement.html
Good luck to you.
Re: ERISA experts? 403b plan at employer
Posted: Thu Oct 20, 2011 6:58 am
by Arthur Rubin
add2cart wrote:Aren't 403(b) plans generally for public school employees, employees of tax-exempt organizations and ministers?
Not exactly. Almost any tax-exempt or government agency can qualify. (I'm only familiar with the tax aspects, and recall the self-dealing prohibition (except for company stock in the the plan for 401(k)/401(a) plans.))