Legal Question in Employment Law in New York

403(b) contributions

Does anyone know whether it's legal for an employer to deduct 403(b) contributions from an employee, and then send the contribution only a month later to the investment company that runs the plan? Is there anything that would require the employer (a city hospital) to send the contribution immediately (like something in ERISA)?

In the interests of full disclosure -- I am an attorney myself, it's just not my area of practice.


Asked on 10/26/05, 4:58 pm

1 Answer from Attorneys
Joseph Tremiti TREMITI LLC

Re: 403(b) contributions

Thank you for your question.

Regulations promulgated by the US Department of Labor (the "timing" rule) require sponsors of 403(b) retirement plans that accept elective deferrals from employees to remit those contributions to plan carriers on either:

-the earliest date on which deferrals can reasonably be separated from the general assets of the employer; or

-the 15th business day of the month following the month in which the contribution was withheld.

For employees to receive credit on their elective deferrals under the USDOL's "timing " rule, contributions should be made as soon as administratively possible but in no case later than 15 business days after the beginning of the month following the month in which elective deferrals were withheld.

Please feel free to contact TREMITI LLC should you have any further questions on this or other employment law related issues.

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Answered on 10/27/05, 12:17 pm


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