DOL Addresses Late Deposit of Participant Loan Repayments (Posted October 31, 2001) Technical Tip 23: The following question and answer are from the DOL Q&A Session at the 2000 ASPPA Annual Conference: Loan repayments withheld from pay were not credited to plan for four months. Could this come under late contribution transactions? DOL Response: The preamble to the plan asset regulation states that, although loan repayments were beyond the scope of the regulation, because loan repayments do not meet the definition of "contribution", the position of the Department is that such loan repayments need to be submitted to the plan within a reasonable amount of time. The Preamble to the DOL's final regulations on plan assets, §2510.3-102, states: "e. Participant Loans Clarification was requested from a commenter that the time periods applicable to determining when participant contributions become plan assets also apply to determining when repayments of participant loans that are withheld or received by the employer become plan assets. Another commenter stated that monies withheld for repayment of participant loans should be afforded at least 90 days after withholding because many plans provide for quarterly repayment of loans. The question of when participant loan repayments become plan assets is beyond the scope of this rulemaking. The notice of proposed rulemaking did not solicit comments on this matter. The record is insufficient for the Department to address this matter in the final regulation. In the Department's view, however, employers should promptly transmit participant loan repayments to plans. An employer's failure to transmit loan payments within a reasonable time after withholding or receiving them could subject the employer to liability for violations of the same provisions of ERISA and criminal law that are violated when an employer is delinquent in forwarding participant contributions to plans." Caveat: The answer was drafted by Fred Reish and Brad Huss, the program moderators, based on their understandings of discussions with four senior officials of the Pension and Welfare Benefits Administration (PWBA) of the U.S. DOL. As a result, it does not represent a formal or binding position statement by the PWBA. View all Tips © 2012 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.