Collection of Delinquent Contributions

In the shadow of LaRue, Department of Labor issues a directive on fiduciary responsibility for collection of delinquent contributions mentions LaRue v. DeWolff, Boberg & Assoc. Inc., No. 06-856 (Feb. 20, 2008) and discusses Field Assistance Bulletin No. 2008-01 – Fiduciary Responsibility for Collection of Delinquent Contributions:

• For Banks serving in the trustee role (directed or discretionary), are they not now responsible for forcing the employer to forward contributions due to the plan, not just participant deferrals; unless some other party is made responsible for that function.
  
• For TPA/Recordkeepers the answer would appear to be it is dependent on their actual role. If the TPA/recordkeeper is purely in the role of recordkeeper with no responsibility for asset investment, apparently nothing has changed.
  
• For TPAs/recordkeepers who are now acting in the investment advisory role, unless responsibility is specifically allocated elsewhere, it is their job to make sure contributions are made, especially for self-trusteed employer plans.
  
• A positive note about this change is that for an employer who is not timely depositing the employees' deferrals, there is now guidance that can be used to let the employer know that he or she may have to be reported to the DOL or sued if the contributions are not made.
  
• As to discretionary contributions, it appears that the rules will apply once the employer has declared that a discretionary contribution is being made. At that point, the contribution becomes due and owing to the plan.

The above commentary, along with a discussion on the required time period to deposit employee deferrals, is originally from Responsibility for Collecting Contributions DOL FAB 2008-1:

"The DOL time for the employer to deliver employee deferrals is five business days. This has been learned from audit findings and verbal guidance. There is no written guidance from the DOL to inform employers of this DOL position."