2068 Federal Register / Vol. 75, No. 9 / Thursday, January 14, 2010 / Rules and Regulations 

on the determination of the cost to the 

public. 

Conclusion 

We reviewed the available data and 

determined that air safety and the 

public interest require adopting the AD 

as proposed. 

Costs of Compliance 

Based on the service information, we 

estimate that this AD would affect about 

13 products of U.S. registry. We also 

estimate that it would take about 6 

work-hours per product to comply with 

this AD. The average labor rate is $80 

per work-hour. Required parts would 

cost about $1,272 per product. Based on 

these figures, we estimate the cost of the 

AD on U.S. operators to be $22,776. 

Authority for This Rulemaking 

Title 49 of the United States Code 

specifies the FAA’s authority to issue 

rules on aviation safety. Subtitle I, 

section 106, describes the authority of 

the FAA Administrator. ‘‘Subtitle VII: 

Aviation Programs,’’ describes in more 

detail the scope of the Agency’s 

authority. 

We are issuing this rulemaking under 

the authority described in ‘‘Subtitle VII, 

Part A, Subpart III, Section 44701: 

General requirements.’’ Under that 

section, Congress charges the FAA with 

promoting safe flight of civil aircraft in 

air commerce by prescribing regulations 

for practices, methods, and procedures 

the Administrator finds necessary for 

safety in air commerce. This regulation 

is within the scope of that authority 

because it addresses an unsafe condition 

that is likely to exist or develop on 

products identified in this rulemaking 

action. 

Regulatory Findings 

We determined that this AD will not 

have federalism implications under 

Executive Order 13132. This AD will 

not have a substantial direct effect on 

the States, on the relationship between 

the national government and the States, 

or on the distribution of power and 

responsibilities among the various 

levels of government. 

For the reasons discussed above, I 

certify this AD: 

1. Is not a ‘‘significant regulatory 

action’’ under Executive Order 12866; 

2. Is not a ‘‘significant rule’’ under the 

DOT Regulatory Policies and Procedures 

(44 FR 11034, February 26, 1979); and 

3. Will not have a significant 

economic impact, positive or negative, 

on a substantial number of small entities 

under the criteria of the Regulatory 

Flexibility Act. 

We prepared a regulatory evaluation 

of the estimated costs to comply with 

this AD and placed it in the AD docket. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http:// 

www.regulations.gov; or in person at the 

Docket Operations office between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays. The AD docket 

contains this AD, the regulatory 

evaluation, any comments received, and 

other information. The street address for 

the Docket Operations office (telephone 

(800) 647–5527) is provided in the 

ADDRESSES section. Comments will be 

available in the AD docket shortly after 

receipt. 

List of Subjects in 14 CFR Part 39 

Air transportation, Aircraft, Aviation 

safety, Incorporation by reference, 

Safety. 

Adoption of the Amendment 

■ Accordingly, under the authority 

delegated to me by the Administrator, 

the FAA amends 14 CFR part 39 as 

follows: 

PART 39—AIRWORTHINESS 

DIRECTIVES 

■ 1. The authority citation for part 39 

continues to read as follows: 

Authority: 49 U.S.C. 106(g), 40113, 44701. 

§ 39.13 [Amended] 

■ 2. The FAA amends § 39.13 by adding 

the following new AD: 

2010–02–01 Turbomeca S.A.: Amendment 

39–16172: Docket No. FAA–2009–0503; 

Directorate Identifier 2009–NE–12–AD. 

Effective Date 

(a) This airworthiness directive (AD) 

becomes effective February 18, 2010. 

Affected ADs 

(b) None. 

Applicability 

(c) This AD applies to Turbomeca Arriel 

1B, 1D, and 1D1 turboshaft engines. These 

engines are installed on, but not limited to, 

Eurocopter France AS350B, AS350BA, 

AS350B1, and AS350B2 helicopters. 

Reason 

(d) This AD results from several events of 

rupture of the Arriel 1 reduction gear box 

intermediate pinions. We are issuing this AD 

to prevent the rupture of the reduction gear 

box intermediate pinion, which could result 

in an overspeed of the power turbine, an 

uncommanded in-flight shutdown of the 

engine, and an emergency autorotation 

landing. 

Actions and Compliance 

(e) Unless already done, do the following 

actions. 

(f) No later than 28 February 2011, replace 

the Reduction Gear Box Intermediate Pinions 

(P/N 0 292 70 779 0) with Pinions 

incorporating Turbome ́ca modification TU 

232 in accordance with Turbome ́ca 

Mandatory Service Bulletin 292 72 0276 

Version B dated 06 November 2008. 

FAA AD Differences 

(g) None. 

(h) Alternative Methods of Compliance 

(AMOCs): The Manager, Engine Certification 

Office, FAA, has the authority to approve 

AMOCs for this AD, if requested using the 

procedures found in 14 CFR 39.19. 

Related Information 

(i) Refer to MCAI EASA Airworthiness 

Directive 2009–0002, dated January 7, 2009, 

for related information. 

(j) Contact James Lawrence, Aerospace 

Engineer, Engine Certification Office, FAA, 

Engine and Propeller Directorate, 12 New 

England Executive Park, Burlington, MA 

01803; e-mail: james.lawrence@faa.gov; 

telephone (781) 238–7176; fax (781) 238– 

7199, for more information about this AD. 

Material Incorporated by Reference 

(k) You must use Turbomeca Mandatory 

Service Bulletin No. 292 72 0276, Version B, 

dated November 6, 2008, to do the actions 

required by this AD, unless the AD specifies 

otherwise. 

(1) The Director of the Federal Register 

approved the incorporation by reference of 

this service information under 5 U.S.C. 

552(a) and 1 CFR part 51. 

(2) For service information identified in 

this AD, contact Turbomeca, 40220 Tarnos, 

France; telephone: 33 05 59 74 40 00; fax: 33 

05 59 74 45 15, or go to: http:// 

www.turbomeca-support.com. 

(3) You may review copies at the FAA, 

New England Region, 12 New England 

Executive Park, Burlington, MA; or at the 

National Archives and Records 

Administration (NARA). For information on 

the availability of this material at NARA, call 

(202) 741–6030, or go to: http:// 

www.archives.gov/federal-register/cfr/ibrlocations.html. 

Issued in Burlington, Massachusetts, on 

December 31, 2009. 

Peter A. White, 

Assistant Manager, Engine and Propeller 

Directorate, Aircraft Certification Service. 

[FR Doc. 2010–337 Filed 1–13–10; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2510 

RIN 1210–AB02 

Definition of ‘‘Plan Assets’’— 

Participant Contributions 

AGENCY: Employee Benefits Security 

Administration, Department of Labor. 


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1While the rule effects the application of ERISA 

and Code provisions, it has no implications for and 

may not be relied upon to bar criminal prosecutions 

under 18 U.S.C. 664. See paragraph (a) of 29 CFR 

2510.3–102. 

2See preamble to Final Rule, 61 FR 41220, 41223 

(August 7, 1996). See also Field Assistance Bulletin 

2003–2 (May 7, 2003). 

3Since the inception of the Voluntary Fiduciary 

Correction Program in 2000, close to 90% of the 

applications have involved delinquent participant 

contribution violations. 

ACTION: Final rule. 

SUMMARY: This document contains a 

final regulation that establishes a safe 

harbor period during which amounts 

that an employer has received from 

employees or withheld from wages for 

contribution to certain employee benefit 

plans will not constitute ‘‘plan assets’’ 

for purposes of Title I of the Employee 

Retirement Income Security Act of 1974, 

as amended (ERISA), and the related 

prohibited transaction provisions of the 

Internal Revenue Code. This regulation 

will enhance the clarity and certainty 

for many employers as to when 

participant contributions will be treated 

as contributed in a timely manner to 

employee benefit plans. This final 

regulation will affect the sponsors and 

fiduciaries of contributory group welfare 

and pension plans covered by ERISA, 

including 401(k) plans, as well as the 

participants and beneficiaries covered 

by such plans and recordkeepers, and 

other service providers to such plans. 

DATES: This final rule is effective on 

January 14, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Janet A. Walters, Office of Regulations 

and Interpretations, Employee Benefits 

Security Administration, U.S. 

Department of Labor, Washington, DC 

20210, (202) 693–8510. This is not a toll 

free number. 

SUPPLEMENTARY INFORMATION:

A. Background 

In 1988, the Department of Labor (the 

Department) published a final rule (29 

CFR 2510.3–102) in the Federal Register 

(53 FR 17628, May 17, 1988), defining 

when certain monies that a participant 

pays to, or has withheld by, an 

employer for contribution to an 

employee benefit plan are ‘‘plan assets’’ 

for purposes of Title I of the Employee 

Retirement Income Security Act of 1974, 

as amended (ERISA) and the related 

prohibited transaction provisions of the 

Internal Revenue Code (the Code).1 The 

1988 regulation provided that the assets 

of a plan included amounts (other than 

union dues) that a participant or 

beneficiary pays to an employer, or 

amounts that a participant has withheld 

from his or her wages by an employer, 

for contribution to a plan, as of the 

earliest date on which such 

contributions can reasonably be 

segregated from the employer’s general 

assets, but in no event to exceed 90 days 

from the date on which such amounts 

are received or withheld by the 

employer. In 1996, the Department 

published in the Federal Register (61 

FR 41220, August 7, 1996), amendments 

to the 1988 regulation modifying the 

outside limit beyond which participant 

contributions to a pension plan become 

plan assets. Under the 1996 

amendments, the outer limit for 

participant contributions to a pension 

plan was changed to the 15th business 

day of the month following the month 

in which participant contributions are 

received by the employer (in the case of 

amounts that a participant or 

beneficiary pays to an employer) or the 

15th business day of the month 

following the month in which such 

amounts would otherwise have been 

payable to the participant in cash (in the 

case of amounts withheld by an 

employer from a participant’s wages). 

The general rule—providing that 

amounts paid to or withheld by an 

employer become plan assets on the 

earliest date on which they can 

reasonably be segregated from the 

employer’s general assets—did not 

change. The maximum time period 

applicable to welfare plans also did not 

change as a result of the 1996 

amendments. 

In the course of investigations of 

401(k) and other contributory pension 

plans and in discussions with 

representatives of employers, plan 

administrators, consultants and others, 

it is commonly represented to the 

Department that, while efforts have been 

made to clarify the application of the 

general rule (i.e., participant 

contributions become plan assets on the 

earliest date on which they can 

reasonably be segregated from the 

employer’s general assets),2 many 

employers, as well as their advisers, 

continue to be uncertain as to how soon 

they must forward these contributions 

to the plan in order to avoid the 

requirements associated with holding 

plan assets. At the same time, the 

Department devotes significant 

enforcement resources to cases 

involving delinquent employee 

contributions and the vast majority of 

applications under the Department’s 

Voluntary Fiduciary Correction Program 

involve delinquent employee 

contribution violations.3

For these reasons, the Department 

decided that it was in the interest of 

plan sponsors and plan participants and 

beneficiaries to amend the participant 

contribution regulation to establish a 

safe harbor that would provide a higher 

degree of compliance certainty with 

respect to when an employer has made 

timely deposits of participant 

contributions to employee benefit plans 

with fewer than 100 participants. The 

Department published a proposed safe 

harbor in the Federal Register (73 FR 

11072) on February 29, 2008. Under the 

proposal, employers with plans with 

fewer than 100 participants would be 

considered to have made a timely 

deposit to their plan under the 

regulation if participant contributions 

are deposited within 7 business days. In 

response to the Department’s invitation 

for comments, the Department received 

28 comments from a variety of parties, 

including plan sponsors and fiduciaries, 

plan service providers, financial 

institutions, and employee benefit plan 

industry representatives. These 

comment letters are available for review 

under Public Comments on the Laws & 

Regulations page of the Department’s 

Employee Benefits Security 

Administration Web site at http:// 

www.dol.gov/ebsa. Set forth below is an 

overview of the final regulation, along 

with a discussion of the public 

comments received on the proposal. 

B. Overview of Final Rule and 

Comments 

For the reasons explained below, the 

Department has decided to adopt a final 

regulation that, with the exception of a 

few minor clarifying changes, is the 

same as the proposal. The following is 

a paragraph by paragraph review of the 

regulation and a summary of the 

comments received with respect to each. 

Paragraph (a)(2) of § 2510.3–102, like 

the proposal, sets forth a safe harbor 

under which participant contributions 

to a pension or welfare benefit plan with 

fewer than 100 participants at the 

beginning of the plan year will be 

treated as having been made to the plan 

in accordance with the general rule (i.e., 

on the earliest date on which such 

contributions can reasonably be 

segregated from the employer’s general 

assets) when contributions are 

deposited with the plan no later than 

the 7th business day following the day 

on which such amount is received by 

the employer (in the case of amounts 

that a participant or beneficiary pays to 

an employer) or the 7th business day 

following the day on which such 

amount would otherwise have been 

payable to the participant in cash (in the 

case of amounts withheld by an 

employer from a participant’s wages). 

As under the 1996 amendments, 

participant contributions will be 


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4To the extent any instance of pre-funding might 

be an extension of credit to the plan, PTE 80–26 

would apply if its terms and conditions are 

satisfied. 

considered deposited when placed in an 

account of the plan, without regard to 

whether the contributed amounts have 

been allocated to specific participants or 

investments of such participants. 

Paragraphs (b)(1), (b)(2) and (c) of 

§ 2510.3–102 are being revised to 

incorporate the appropriate cross 

references to ‘‘paragraph (a)(1)’’ instead 

of ‘‘paragraph (a)’’. 

Scope of Safe Harbor 

The final safe harbor, like the 

proposal, is available for both 

participant contributions to pension 

benefit plans and participant 

contributions to welfare benefit plans. 

Several commenters requested that the 

Department clarify whether the 

regulation applies to SIMPLE IRAs and 

salary reduction SEPs. The 

Department’s view is that elective 

contributions to an employee benefit 

plan, whether made pursuant to a salary 

reduction agreement or otherwise, 

constitute amounts paid to or withheld 

by an employer (i.e., participant 

contributions) within the scope of 

§ 2510.3–102, without regard to the 

treatment of such contributions under 

the Internal Revenue Code. See 61 FR 

41220 (Aug. 7, 1996). Both the general 

rule and the optional safe harbor 

provisions in paragraphs (a)(1) and 

(a)(2) of § 2510.3–102, respectively, are 

applicable to participant contributions 

to any plan, including SIMPLE IRAs and 

salary reduction SEPs. However, the 

Department notes that, pursuant to 

§ 2510.3–102(b)(2), the maximum period 

during which salary reduction elective 

contributions under a SIMPLE plan that 

involves SIMPLE IRAs may be treated as 

other than plan assets is 30 calendar 

days, the same number of days as the 

period within which the employer is 

required to deposit withheld 

contributions under a SIMPLE plan that 

involves SIMPLE IRAs under section 

408(p) of the Internal Revenue Code. 

See 62 FR 62934 (Nov. 25, 1997). 

One commenter suggested that, under 

the safe harbor and the general rule, 

employers be permitted to pre-fund 

contributions. The commenter indicated 

that an employer may wish to deposit 

the participant contributions to the plan 

in advance of withholding those 

contributions, and expressed concern 

that the general rule and the safe harbor 

require that contributions be made 

within a certain number of days after 

the amount is withheld from pay. In 

general, § 2510.3–102 is intended to 

ensure that an employer deposits 

participant contributions, withheld by 

or paid to the employer, to the plan as 

soon as practicable. As to whether in 

any given instance ‘‘pre-funding’’ of 

participant contributions, such as that 

described by the commenter, will 

necessarily result in compliance with 

the regulation or safe harbor will, in the 

view of the Department, depend on the 

particular facts and circumstances.4

One commenter requested that the 

Department clarify the application of 

the safe harbor rule to contributory 

welfare plans in light of the 

Department’s guidance provided in 

Technical Release 92–01. 57 FR 23272 

(June 2, 1992), 58 FR 45359 (Aug. 27, 

1993). ERISA section 403(b) contains a 

number of exceptions to the trust 

requirement for certain types of assets, 

including assets which consist of 

insurance contracts, and for certain 

types of plans. In addition, the 

Department has issued Technical 

Release 92–01, which provides that, 

with respect to certain welfare plans 

(e.g., associated with cafeteria plans), 

the Department will not assert a 

violation of the trust or certain other 

reporting requirements in any 

enforcement proceeding, or assess a 

civil penalty for certain reporting 

violations involving such plans solely 

because of a failure to hold participant 

contributions in trust. The Department 

confirms that Technical Release 92–01 

is not affected by the final regulation 

contained in this document, and 

remains in effect until further notice. 

Length of Safe Harbor Period 

A number of commenters requested 

that the Department increase the length 

of the safe harbor period. Several 

commenters requested that the safe 

harbor period be 10 business days. 

Several others requested that it be 14 

days. One commenter requested that the 

safe harbor period be 12 business days. 

One commenter requested that small 

employers have until the 5th day of the 

month following the month in which 

amounts are withheld from pay as a safe 

harbor period. One commenter 

requested that small employers have 

until the 15th business day of the month 

following the month in which amounts 

are received or withheld by the 

employer as a safe harbor period. These 

commenters represented a variety of 

reasons that would cause small 

employers difficulty in meeting a 

7-business day safe harbor period. Some 

commenters represented that small 

employers will be unable to meet the 

7-business day safe harbor period in 

circumstances of the business owner’s 

or staff person’s illness or vacation. 

Other commenters describe problems 

that arise for small employers, 

particularly those using outside payroll 

firms to process payroll and make 

contributions, such as Internet 

problems, loss of power and incorrect 

reporting by a payroll company to the 

plan’s financial institution. These 

commenters requested that these types 

of special circumstances be addressed 

by providing a longer safe harbor 

period. Several commenters 

recommended that the 7-business day 

safe harbor period be retained, noting 

that such period is an appropriate safe 

harbor period for small plans. In 

attempting to define the appropriate 

period for a safe harbor, the Department 

reviewed data collected in the course of 

its investigations of possible failures to 

deposit participant contributions in a 

timely fashion. On the basis of these 

data, the Department concluded that 

adoption of a 7-business day safe harbor 

rule would allow most employers with 

small plans to take advantage of the safe 

harbor and, thereby, benefit from the 

certainty of compliance afforded by the 

proposed regulation. After careful 

consideration of all the comments 

concerning the length of the safe harbor 

period, the Department has decided to 

retain the 7-business day safe harbor 

period for small plans. The Department 

believes that the special circumstances 

and problems particular to small 

employers noted by commenters as 

described above, will generally be 

accommodated under the current facts 

and circumstances general rule. Several 

commenters requested a longer safe 

harbor period for small plans due to the 

current systems of small plans involving 

manual payroll systems, limited clerical 

staff, the amount of time needed to 

reconcile the plan contributions, and 

the increased cost and workload for 

more frequent remittances. The general 

rule—providing that amounts paid to or 

withheld by an employer become plan 

assets on the earliest date on which they 

can reasonably be segregated from the 

employer’s general assets—will also 

accommodate these other timing issues 

raised by commenters. 

Deposit-by-Deposit Basis 

One commenter asked whether a 

failure to meet the safe harbor during 

one payroll period will result in 

application of the general rule for 

determining when participant 

contributions are plan assets for an 

entire plan year. The safe harbor is 

available on a deposit-by-deposit basis, 

such that a failure to satisfy the safe 

harbor for any deposit of participant 

contribution amounts to a plan will not 


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result in the unavailability of the safe 

harbor for any other deposit to the plan. 

Optional Safe Harbor 

One commenter requested that the 

safe harbor nature of the proposal be 

confirmed. Several commenters 

misunderstood the optional safe harbor 

nature of the proposal and objected to 

a mandatory requirement of 7 business 

days for the deposit of participant 

contributions into small plans. In 

response to these concerns, the 

Department has added new paragraph 

2510.3–102(a)(2)(ii), clarifying that the 

final safe harbor regulation is not the 

exclusive means by which employers 

can discharge their obligation to deposit 

participant contributions or loan 

repayments on the earliest date on 

which such contributions and payments 

can reasonably be segregated from the 

employer’s general assets. The 

Department notes that, when an 

employer fails to deposit participant 

contributions or loan repayments in 

accordance with the general rule (i.e., as 

soon as such contributions or payments 

can reasonably be segregated from the 

employer’s general assets), losses and 

interest on such late contributions must 

be calculated from the actual date on 

which such contributions and/or 

payments could reasonably have been 

segregated from the employer’s general 

assets, not the end of the safe harbor 

period. 

Large Plans 

The Department specifically invited 

comment on whether the proposed safe 

harbor should extend to contributions to 

plans with 100 or more participants. In 

this regard, the Department requested 

that commenters provide information 

and data sufficient to evaluate the 

current contribution practices of such 

employers and to conclude that it is a 

net benefit to such employers and 

participants to have a safe harbor. The 

Department also requested comments on 

the need for a safe harbor, and the 

corresponding size of the plans for 

which there appears to be a need for 

such a safe harbor. Several commenters 

requested that the safe harbor rule be 

made available to larger plans, 

explaining that larger plans have issues 

of reconciliation and multiple 

geographic sites with different payroll 

periods. Some of these commenters 

argued that large employers would not 

slow down remittances as a result of a 

safe harbor provision. After careful 

consideration of the comments, the 

Department does not believe that it has 

a sufficient record on which to evaluate 

current practices and assess the costs, 

benefits, risks to participants associated 

with extending the safe harbor or any 

variation thereof to large plans at this 

time. As a result, the Department has 

determined not to change the safe 

harbor provision to cover participant 

contributions to a pension or welfare 

benefit plan with 100 or more 

participants. 

Multiemployer and Multiple Employer 

Plans 

Several commenters argued that, in 

the case of multiemployer and multiple 

employer plans, the regulation should 

base the safe harbor’s availability on the 

size of the employer, instead of the size 

of the plan. These commenters argued 

that small employers maintaining 

multiemployer and multiple employer 

plans should have the same certainty as 

an employer sponsoring its own plan. 

These commenters explained that small 

employers that participate in large 

multiemployer and multiple employer 

plans face the same challenges as small 

employers sponsoring single employer 

plans, representing that these small 

employers also have payrolls that are 

independent, less sophisticated and 

many are manual. Several commenters 

also argued that the safe harbor should 

be expanded to cover all participating 

employers in multiemployer and 

multiple employer plans. These 

commenters argued that having a safe 

harbor only for small employers 

participating in large multiemployer 

and multiple employer plans would 

create undue administrative burden and 

cost. As described by these commenters, 

employers remit participant 

contributions to multiemployer plans in 

accordance with the collective 

bargaining agreements and other plan 

documents. With regard to the 

foregoing, the Department notes that it 

addressed the application of participant 

contribution requirements to 

multiemployer defined contribution 

plans in Field Assistance Bulletin (FAB) 

2003–2 (May 7, 2003). As described in 

the FAB, the provisions of the 

participant contribution regulation 

apply in the same way to multiemployer 

plans that the provisions apply to single 

employer plans and that, as is the case 

with single employer plans, if a 

multiemployer plan maintains a 

reasonable process for the expeditious 

and cost-effective receipt of 

contributions, this process may be taken 

into account in determining when 

participant contributions can reasonably 

be segregated from the employer’s 

general assets. To the extent that a 

collective bargaining describes such a 

process, the collective bargaining 

agreement should be considered in 

determining when participant 

contributions become plan assets. To be 

reasonable, a plan’s process for 

receiving participant contributions 

should take into account how quickly 

the participating employers can 

reasonably segregate and forward 

contributions. The plan fiduciaries 

should also consider how costly to the 

plan a more expeditious process would 

be. These costs should be balanced 

against any additional income and 

security the plan and plan participants 

would realize from a faster system. 

Thus, the FAB describes the 

Department’s view that, in determining 

when participant contributions can 

reasonably be segregated from the 

general assets of any given contributing 

employer to a multiemployer defined 

contribution plan, the time frames 

established in collective bargaining, 

employer participation and similar 

agreements must be taken into account 

to the extent such agreements represent 

the considered judgment of the plan’s 

trustees that such time frames reflect the 

appropriate balancing of the costs of 

transmitting, receiving and processing 

such contributions relative to the 

protections provided to participants, 

provided that any such time frames do 

not extend beyond the maximum period 

prescribed in § 2510.3–102(b). The 

Department believes that the guidance 

in this FAB provides clarity and 

flexibility for contributing employers to 

multiemployer plans regarding the 

application of the participant 

contribution requirements. For this 

reason, the Department has decided to 

retain the safe harbor rule for small 

plans without modification from the 

proposal for contributing employers to 

multiemployer or multiple employer 

plans. 

Examples 

One commenter requested that the 

Department include an example in the 

regulation regarding a situation 

involving participant contributions 

made to a plan outside the safe harbor 

period. Under the final safe harbor rule, 

like the proposal, the general rule— 

providing that amounts paid to or 

withheld by an employer become plan 

assets on the earliest date on which they 

can reasonably be segregated from the 

employer’s general assets—did not 

change. Given the facts and 

circumstances general rule, the 

Department has determined not to add 

an example concerning circumstances 

that require an employer to deposit 

participant contributions beyond the 

safe harbor period. Another commenter 

requested that the Department retain an 

example from the 1996 amendments in 

which an employer deposits 


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5This advisory opinion may be accessed at http:// 

www.dol.gov/ebsa/regs/aos/ao2002-02a.html (May 

17, 2002). 

6A key factor limiting the cost of this regulation 

is that it requires no action of the part of any 

employer, plan, or participant; it creates an 

incentive for employers to remit participant 

contributions on more regular schedules. 

contributions into a pension plan after 

the 15th business day maximum period 

limit. The Department believes that the 

examples in the proposal effectively 

illustrate the general rule and the 

application of the safe harbor. As a 

result, the Department has decided to 

retain the examples in the proposal 

without modification. 

Participant Loan Repayments 

The Department proposed to amend 

paragraph (a)(1) of § 2510.3–102 to 

extend the application of the regulation 

to amounts paid by a participant or 

beneficiary or withheld by an employer 

from a participant’s wages for purposes 

of repaying a participant’s loan 

(regardless of plan size). See Advisory 

Opinion 2002–02A (May 17, 2002) 5. 

The proposal also served to extend the 

availability of the 7-business day safe 

harbor to loan repayments to plans with 

fewer than 100 participants. The 

Department received no comments on 

these provisions and is adopting the 

provisions without change. 

Effective Date 

Under the proposal, the Department 

contemplated making the safe harbor 

and the proposed amendments to 

paragraph (a)(1) and (f)(1) of § 2510.3– 

102 effective on the date of publication 

of the final regulation in the Federal 

Register. Two commenters suggested 

that the effective date of the regulation 

should be delayed for at least 6 months 

following its publication to provide 

sufficient time for plan sponsors to 

evaluate additional responsibilities and 

options. Since the regulation provides 

an optional safe harbor rule as discussed 

above, the Department has determined 

not to change the effective date of the 

safe harbor provision. The safe harbor 

will provide a means for certain 

employers to assure themselves that 

they are not holding plan assets, 

without having to determine that 

participant contributions were 

forwarded to the plan at the earliest 

reasonable date. By providing such 

assurance, the safe harbor will grant or 

recognize an exemption or relieve a 

restriction within the meaning of 5 

U.S.C. 553(d)(1). Moreover, the safe 

harbor will encourage certain employers 

to take immediate steps to review their 

systems and, if necessary, shorten the 

period within which participant 

contributions are forwarded to the plan 

in order to take advantage of the safe 

harbor and, thereby, extend the benefit 

of earlier contributions to participants 

and beneficiaries earlier than might 

otherwise occur with a deferred 

effective date. Thus, the Department 

retained the effective date of the final 

regulation. 

C. Regulatory Impact Analysis 

Summary 

The safe harbor will provide 

employers with increased certainty that 

their remittance practices, to the extent 

that they meet the safe harbor time 

limits, will be deemed to comply with 

the regulatory requirement that 

participant contributions be forwarded 

to the plan on the earliest date on which 

they can reasonably be segregated from 

the employer’s general assets. This 

increased certainty will produce 

benefits to employers, participants, and 

beneficiaries by reducing disputes over 

compliance and allowing easier 

oversight of remittance practices. In 

addition, the tendency to conform to the 

safe harbor time limit may serve to 

reduce the existing variations in 

remittance times, providing increased 

certainty for employers and other plan 

sponsors and participants. In the case of 

employers that expedite their remittance 

practices to take advantage of the safe 

harbor, plan participants may derive an 

additional benefit in the form of 

increased investment earnings. The 

Department estimates that accelerated 

remittances could result in $43.7 

million in additional income to be 

credited annually to participant 

accounts under the plans if no 

employers choose to delay remittances 

in response to the safe harbor and $19 

million annually even if all eligible 

employers were to delay remittances to 

the full duration of the safe harbor. 

Costs attendant to the safe harbor 

arise principally from one-time start-up 

costs to alter remittance practices to 

conform to the safe harbor and from any 

additional on-going administrative costs 

attendant to quicker, and possibly more 

frequent, transmissions of participant 

contributions from employers to plans. 

The Department believes that the costs 

likely to arise from either source will be 

small and that the benefits of this 

regulation will justify its costs.6

The data, methodology, and 

assumptions used in developing these 

estimates are more fully described 

below in connection with the 

Department’s analyses under Executive 

Order 12866 and the Regulatory 

Flexibility Act (RFA). 

Executive Order 12866 Statement 

Under Executive Order, the 

Department must determine whether a 

regulatory action is ‘‘significant’’ ’ and 

therefore subject to the requirements of 

the Executive Order and subject to 

review by the Office of Management and 

Budget (OMB). Exec. Order No. 12866, 

58 FR 51735 (Oct. 4, 1993). Under 

section 3(f) of the Executive Order, a 

‘‘significant regulatory action’’ ’ is an 

action that is likely to result in a rule 

(1) having an annual effect on the 

economy of $100 million or more, or 

adversely and materially affecting a 

sector of the economy, productivity, 

competition, jobs, the environment, 

public health or safety, or State, local or 

Tribal governments or communities 

(also referred to as ‘‘economically 

significant’’); (2) creating serious 

inconsistency or otherwise interfering 

with an action taken or planned by 

another agency; (3) materially altering 

the budgetary impacts of entitlement 

grants, user fees, or loan programs or the 

rights and obligations of recipients 

thereof; or (4) raising novel legal or 

policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the Executive 

Order. It has been determined that this 

action is significant under section 3(f)(4) 

because it raises novel legal or policy 

issues arising from the President’s 

priorities. Accordingly, the Department 

has undertaken an analysis of the costs 

and benefits of the final regulation. 

OMB has reviewed this regulatory 

action. 

This final rule will establish a safe 

harbor rule for employers’ timely 

remittance of participant contributions 

to employee benefit plans. The safe 

harbor is available only to employer 

remittances of participant contributions 

to plans with fewer than 100 

participants. Under the final rule, 

employers that remit participant 

contributions within 7 business days 

after the date on which received or 

withheld would be deemed to have 

complied with the requirement of 29 

CFR 2510.3–102 to treat participant 

contributions as plan assets ‘‘as of the 

earliest date on which such 

contributions can reasonably be 

segregated from the employer’s general 

assets.’’ 

This rule is likely to encourage some 

eligible employers whose current 

remittance practices involve holding 

participant contributions for longer than 

7 business days to change their 

remittance practices to conform to the 

7-business day time limit. Because the 

rule is not mandatory and changes in 

remittance practices are likely to entail 


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7This project was undertaken by the Department 

in order to develop a better understanding of 

current employer practices regarding contributory 

individual account pension plans. The project was 

based on a representative sample of 487 

contributory, single employer defined contribution 

plans. Plans having these characteristics will be 

referred to as the ‘‘ECP Universe.’’ In 2004, the 

Department collected detailed data on the 

remittance practices of the employers sponsoring 

the sample plans. The collected data covered the 

12-month period preceding the date in 2004 on 

which EBSA interviewed the employer-sponsor and 

included, for example, the exact dates on which 

wages were withheld from employees and the exact 

dates on which participant contributions were 

deposited in the plan’s accounts. For purposes of 

this analysis, the sample data has been weighted to 

the 2004 Form 5500 universe of contributory, single 

employer defined contribution plans. 

8While the safe harbor is available to 

contributory defined benefit plans, contributory 

multiemployer defined contribution plans, and 

contributory welfare benefit plans, the Department 

expects that a small number of such plans will take 

advantage of the safe harbor. SIMPLE IRAs and 

SARSEPs (‘‘SIMPLE/SARSEPs’’) are the major type 

of plans eligible for the safe harbor that are not 

included in the ECP Universe, because they are 

exempt from the Form 5500 filing requirement. 

Although complete and reliable data on the number 

of SIMPLE/SARSEPs and the amount of participant 

contributions to them is not available, based on data 

from sources including the IRS (http://www.irs.gov/ 

pub/irs-soi/04inretirebul.pdf) and the Investment 

Company Institute (Table A14 from http:// 

www.ici.org/stats/res/retmrkt_update.pdf), the 

Department estimates that plans included in the 

ECP Universe may comprise about half of all plans 

eligible for the safe harbor and hold about 79% of 

all participant contributions to eligible plans. The 

Department, therefore, believes that the ECP 

provides highly meaningful data for estimating 

potential impacts. 

9This percentage is based on an EBSA tabulation 

of its 2004 Form 5500 research file. 

10These data indicate that 90% of plans with 

fewer than 100 participants currently receive at 

least some participant contributions within 7 

business days after withholding. 

11The employers having the most to gain from 

delaying remittances to the full extent allowed 

under the safe harbor would be those who currently 

remit employee contributions most promptly. For 

example, an employer that currently remits 

contributions on the day they are received or 

withheld and responds to the safe harbor by 

delaying remittances to the 7-business day safe 

harbor limit would gain use of the funds for 7 

business days. At an annual rate of 8%, the value 

of the float gain would be less than one-quarter of 

one percent of employee contributions. 

12See fn.6, supra. 

some cost to employers, only those 

employers that believe they will benefit 

from the protection of the safe harbor 

will elect to take advantage of the safe 

harbor. 

In order to analyze the potential 

economic impact of this rule, the 

Department examined data on the 

remittance of participant contributions 

to a representative sample of 

contributory single employer defined 

contribution pension plans collected 

from EBSA’s Employee Contributions 

Project 2004 Baseline Project (‘‘ECP’’).7

Based on data from this project and 

from Form 5500 filings for the 2004 plan 

year, which is the year of this one-time 

project, the Department estimates that 

the safe harbor will be available to an 

estimated 311,000 single employer 

defined contribution plans with fewer 

than 100 participants.8 These plans 

receive approximately 18% of 

participant contributions made to all 

contributory single employer defined 

contribution plans.9

Using these data, the Department 

analyzed the current remittance 

practices of the employers sponsoring 

these plans, extrapolated the results to 

characterize the remittance practices of 

plans in general, and projected the 

potential impact of this safe harbor rule. 

The Department considered both the 

extent to which data on remittance 

records of these plans reveal a 

preference or standard practice 

regarding timing, and the extent to 

which changes in the length of time 

between withholding and receipt by the 

plan might result in an increase (or 

decrease) in investment income to 

participants’ accounts. 

The sample data indicate that 

employers’ remittance patterns for 

participant contributions to plans vary 

substantially, both across payroll 

periods of an individual employer and 

across employers. Based on analysis of 

these data, the Department has 

concluded that most employers 

sponsoring plans with fewer than 100 

participants will not find it difficult to 

take advantage of the safe harbor.10

Twenty-one percent of all plans with 

fewer than 100 participants for which 

data was obtained had remittance times 

within 7 business days for all pay 

periods; an additional 69% remitted 

participant contributions for at least 

some of the employer’s payroll periods 

within 7 business days. Based on these 

data, the Department has concluded that 

a large majority of contributory plans 

could comply with a 7-business day safe 

harbor. Moreover, a substantial portion 

of contributory plans would reduce the 

time taken to make at least some 

deposits. The Department recognizes 

that to take advantage of the safe harbor 

for all remittances, many of the firms 

that currently remit employee 

contributions within 7 business days for 

some, but not all, pay periods would 

have to change their remittance 

schedule from monthly remittances to 

remittances following each weekly or 

biweekly pay period. 

The Department anticipates that a 

substantial number of employers that 

currently take longer than 7 business 

days to remit participant contributions 

will speed up their remittances in order 

to take advantage of the safe harbor. At 

the same time, it is possible that some 

employers that currently remit 

participant contributions more quickly 

than the safe harbor rule will slow their 

remittances due to the safe harbor. Such 

behavior might benefit the remitting 

employers by reducing their 

administrative costs and by increasing 

the time they are holding the 

remittances. However, the Department 

believes that only a small fraction of 

that group, if any, would elect to incur 

the expense and risk of negative 

participant reaction that might arise 

from slowing down their remittances to 

take full advantage of the safe harbor 

time period, especially because the 

amount of the potential income transfer 

on a per-plan basis is very small.11 The 

potential consequences of reliance on 

the safe harbor for earnings on 

participant contributions are further 

described in the Benefits section below. 

Costs 

On the basis of information from 

EBSA’s ECP,12 the Department believes 

that an estimated 21% of eligible single 

employer defined contribution plans 

(approximately 64,000 plans) currently 

receive all participant contributions 

within 7 or fewer business days. The 

employers that sponsor such plans 

would not have to modify their current 

systems and, as a result, would incur no 

additional costs to obtain the 

compliance certainty available under 

the safe harbor provisions. On the other 

hand, 10% of the eligible plans 

(approximately 32,000 plans) 

consistently receive participant 

contributions later than 7 business days 

from the date of the employer’s receipt 

or withholding. The remaining 69% of 

the eligible plans in the ECP Universe 

defined in footnote 6 above 

(approximately 215,000 plans) are 

estimated to receive participant 

contributions within 7 business days for 

some, but not all, of their payroll dates, 

and the Department assumes that these 

employers would have to make only 

minor modifications in order to take 

advantage of the safe harbor for all 

participant contributions. 

In deciding whether to rely on the 

safe harbor, employers will weigh the 

benefits of compliance certainty against 

the cost of changes needed to make 

quicker and possibly more frequent 

deposits. Because the cost of modifying 

remittance practices or systems will 

depend, to some extent, on the length of 

time currently taken to make 

remittances, the Department believes it 

is reasonable to assume that those 

employers currently transmitting some 

of the participant contributions within 


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13While several commenters questioned the 

Department’s assumption that employers currently 

meeting the safe harbor in some, but not all, pay 

periods would have to make only minor 

modifications in order to come fully within the safe 

harbor time limit, no commenter provided any 

information or data with which to estimate such 

costs in response to the Department’s request for 

information and comments on this issue in the 

proposed rule. For this reason, and because no 

employer is under any obligation to change its 

remittance practices as a result of the final rule, the 

Department did not modify its assumption. 

14The Department has assumed an average 

annual return of 8.3% for pension plan assets. This 

rate is an estimate of the long-term rate of return 

on defined contribution plan assets implicit in the 

flow of funds account of the Federal Reserve. One 

commenter expressed concern that the 

Department’s use of a long-term rate of return on 

defined contribution plan assets was inappropriate, 

because it overestimates the short-term rates at 

which firms would actually invest participant 

contributions before their remittance to the plan. 

The Department chose a long-term rate to the value 

the gains or losses that participants would 

experience, because an acceleration or delay of plan 

remittances affects participants’ and beneficiaries’ 

long-term investments, and, therefore, has not 

modified its assumption. 

15The estimate of $43.7 million is derived by 

dividing $34.5 million by 79%, the percentage of 

total contributions to eligible plans estimated to be 

made to plans in the ECP Universe. In this absence 

of data on remittance practices for plans not in the 

ECP Universe, the calculation assumes that their 

practices are similar to those for eligible plans in 

the ECP Universe. 

16As described above in footnote 7, SIMPLE/ 

SARSEPs were not included in the ECP Universe 

because such plans are exempt from the Form 5500 

filing requirement. In the absence of data on the 

remittance practices of sponsors of such plans, the 

Department examined what is known about these 

plans to make assumptions regarding their 

remittance practices. SIMPLE/SARSEPs average 4– 

5 participants compared to 30 participants for plans 

in the ECP Universe. The data collected through the 

ECP showed a strong tendency for smaller plans to 

receive employee contributions more slowly than 

larger plans. Although factors other than plan size 

clearly influence remittance behavior, based solely 

on this factor, the Department expects that SIMPLE/ 

SARSEPs would receive employee contributions, on 

average, more slowly than plans included in the 

ECP Universe. Therefore, a higher percentage of 

these plans would have an incentive to accelerate 

remittances to qualify for the safe harbor and lower 

percentages of these plans would have an incentive 

to delay remittances to capture float gains than 

plans in the ECP Universe. As a result, the 

Department believes that the risk that participants 

in SIMPLE/SARSEPs would suffer net investment 

losses as a direct result of changes in remittance 

practices made in response to this regulation is 

even less than for plans in the ECP Universe. 

Moreover, if the expected difference in remittance 

behavior does exist, then sponsors of SIMPLE/ 

SARSEPs would have to implement greater changes 

to qualify for the safe harbor, on average, than plans 

in the ECP Universe. The Department, therefore, 

expects that smaller percentages of these employers 

would opt to change their remittance practices in 

order to qualify for the safe harbor due to 

prohibitive costs. 

17 If all employers that currently remit 

contributions in fewer than 7 days were to slow 

down their remittance times to 7 days, participants 

in plans in the ECP Universe might experience 

transfer losses of as much as $19.5 million 

annually, but would nonetheless likely experience 

an aggregate net gain of $14 million. Assuming that 

remittance patterns for eligible plans not in the ECP 

Universe resemble patterns for those in the ECP 

Universe, the Department estimates potential 

transfer losses for participants in all eligible plans 

of $24.7 million and aggregate net gains of $19 

million. 

an 8- to 14-day period may find it less 

expensive to modify their practices to 

take advantage of the safe harbor than 

employers currently operating under 

remittance practices or systems with 

longer delays. The cost to the former 

group of employers to shorten the 

remittance period to conform to the safe 

harbor may be modest or negligible. 

However, the Department has no 

current, reliable data concerning the 

cost of required changes relating to 

shortening the remittance period for 

participant contributions and therefore 

did not attempt to estimate that cost.13

Because conformance to the safe harbor 

is voluntary, the Department believes 

that the transition cost for employers 

electing to conform will be offset by the 

elimination of the current cost 

attributable to existing uncertainty 

about how to meet the ‘‘earliest date’’ 

standard of 29 CFR 2510.3–102. Those 

employers that already conform will not 

incur any costs, but will benefit from 

the safe harbor. 

Benefits 

The rule will produce benefits for 

both participants and employers in the 

form of increased certainty regarding 

timely remittance of participant 

contributions to plans. This increased 

certainty will decrease costs for both 

employers and participants by reducing 

the need to determine, on an 

individualized basis in light of 

particular circumstances, whether 

timely remittances have been made. 

Employers that conform to the safe 

harbor will also benefit by obviating the 

need to determine and monitor how 

quickly participant contributions can be 

segregated from their general assets. 

They also will face a reduced risk of 

challenges to their particular remittance 

practices from participants and the 

Department. 

In the case of plan sponsors that elect 

to expedite the deposit of participant 

contributions to take advantage of the 

safe harbor, contributions will be 

credited to the investment accounts 

earlier than previously and will be able 

to accrue investment earnings sooner. 

The Department has calculated these 

potential investment gains, but lack of 

knowledge about how employers will 

react to a regulatory safe harbor renders 

these estimates uncertain. If, for 

illustration, the safe harbor results in a 

7-business day remittance of all 

remittances that are currently taking 

more than 7 business days, then the 

regulatory safe harbor would result in 

an estimated additional $34.5 million in 

investment earnings 14 for participants 

in the ECP Universe each year and $43.7 

million for participants in all eligible 

plans.15 These potential gains would be 

reduced by any losses that would occur 

due to any slow-down in response to the 

safe harbor by employers with currently 

quicker remittance times.16 The 

Department, however, believes it 

unlikely that a significant fraction of 

employers would slow down 

remittances for the sole purpose of 

taking advantage of the minor income 

transfer resulting from retaining 

contributions for the full safe harbor 

period.17

Alternatives Considered 

The Department’s consideration of 

alternatives primarily focused on 

striking the right balance between a time 

frame that is not so short as to foreclose 

any meaningful number of plans from 

taking advantage of the safe harbor and 

a time frame that is not so long as to 

create financial incentives for employers 

to hold participant contributions longer 

than necessary, taking into account 

current practices. Among others, the 

Department considered the following 

two alternative time periods: (1) A 

5-business day safe harbor, and (2) a 

10-business day safe harbor. After 

reviewing the available data, however, 

the Department rejected these 

alternatives in favor of the 7-business 

day safe harbor for the reasons 

discussed below. 

The 7-business day safe harbor is 

likely to encourage eligible employers 

whose remittance practices involve 

holding participant contributions for 

longer than 7 business days to change 

their remittance practices to conform to 

the 7-business day safe harbor time 

limit. Currently, only 12 percent of the 

eligible single employer defined 

contribution plans consistently receive 

remittances within 5 business days, 

compared to the 21 percent that 

consistently receive remittances within 

7 business days. Although a 5-business 

day safe harbor could provide higher 

potential gains (an estimated $40.5 

million for plans in the ECP Universe) 

and lower potential losses (an estimated 

$12.2 million for plans in the ECP 

Universe) to participants if employers 

choose to conform to the safe harbor, the 

shorter remittance period would likely 

make it unattractive to many employers, 

because the shorter safe harbor would 

increase the disparity from current 

practices. Any employer anticipating 

large costs of compliance with the safe 

harbor might not be convinced that its 


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18 If all currently faster remittances were delayed 

until the tenth business day, annual investment 

earnings credited to participant accounts could be 

reduced by as much as $32.3 million. Accelerating 

all currently slower remittances to the tenth 

business day would increase such earnings by $27.4 

million resulting in an aggregate annual loss of $4.9 

million. 

19EBSA estimates that if the safe harbor were set 

at 10 business days, then potential losses to 

participants of $32 million would exceed potential 

gains of $27 million. Some commenters expressed 

the opinion that employers will not delay 

remittances in response to the safe harbor, and that 

the Department could therefore safely establish a 

safe harbor period with a duration of longer than 

seven days without risking net investment losses for 

participants. The Department has acknowledged 

uncertainty regarding the extent to which 

employers will accelerate or delay remittances in 

response to the safe harbor, and assumes neither 

that remittances will be maximally delayed as 

assumed in the loss calculation, nor maximally 

accelerated as assumed in the gain calculation, but 

recognizes that selection of a safe harbor period for 

which potential gains exceed potential losses at 

least provides assurance that participants will not 

experience net losses as long as the extent to which 

employers delay remittances in response to the safe 

harbor does not exceed the extent to which they 

accelerate remittances. 

20The Department consulted with the Small 

Business Administration in making this 

determination as required by 5 U.S.C. 601(3) and 13 

CFR 121.903(c). 

benefits would be sufficient to justify 

changing its remittance practices. If, as 

a result, too few employers adopt the 

safe harbor, the regulation might fail to 

produce the intended benefit that would 

flow from the certainty of uniform 

remittance practices on which 

employers and participants can rely. 

The 10-business day safe harbor, in 

contrast, was considered to represent 

little compliance burden, since 

currently 29 percent of eligible single 

employer defined contribution plans 

receive remittances consistently within 

10 business days and 94 percent receive 

remittances that quickly for at least 

some pay periods. However, because a 

large proportion of eligible plans 

currently receive some or all participant 

contributions more quickly, a safe 

harbor of 10 business days would entail 

some risk of producing a net aggregate 

loss of investment income to participant 

accounts as compared with current 

practice.18

As part of the ECP, EBSA 

investigators also made judgments as to 

reasonable periods for each remittance. 

These data show that while remittance 

within 5 business days was consistently 

reasonable for 48% of eligible plans, 

that percentage increased to 61% by 

extending the reasonable period to 7 

business days. Thus, the two-day longer 

reasonable period also has the 

advantage of being consistently 

reasonable for a clear majority of eligible 

plans. A further extension of the safe 

harbor to 10 business days would 

further increase (to 81%) the percentage 

of plans for which the safe harbor is 

consistently reasonable, but was not 

chosen because it would risk producing 

net investment losses for participants if 

employers were to delay remittances to 

the full extent permitted under the safe 

harbor.19

Taking into account the potential 

costs and benefits presented by the 

various alternative safe harbors, the 

Department believes that the 7-business 

day safe harbor would best balance the 

current practices of employers and the 

potential costs to them of change, as 

well as the value to participants of 

encouraging quicker transmission of 

contributions. As explained earlier, the 

available data indicate that employers 

sponsoring plans with fewer than 100 

participants are generally able to 

transmit participant contributions 

within 7 business days of withholding 

or receipt. Furthermore, the impact of a 

7-business day safe harbor is anticipated 

to be generally favorable to participants 

and to result in aggregate net gains to 

their accounts, even in the unlikely 

event that all employers that currently 

remit contributions more quickly than 7 

business days were to slow down their 

remittances to the maximum duration of 

the safe harbor. 

Paperwork Reduction Act 

The Department of Labor, as part of its 

continuing effort to reduce paperwork 

and respondent burden, conducts a 

preclearance consultation program to 

provide the general public and Federal 

agencies with an opportunity to 

comment on proposed and continuing 

collections of information in accordance 

with the Paperwork Reduction Act of 

1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). 

This helps to ensure that the public can 

clearly understand the Department’s 

collection instructions and provide the 

requested information in the desired 

format and that the Department 

minimizes the public’s reporting burden 

(in both time and financial resources) 

and can properly assess the impact of its 

collection requirements. 

On August 7, 1996 (61 FR 41220), the 

Department published in the Federal 

Register an amendment to the 

Regulation Relating to a Definition of 

‘‘Plan Assets’’—Participant 

Contributions (29 CFR 2510.3–102). 

This amendment created a procedure 

through which an employer could 

extend the maximum period for 

depositing participant contributions by 

an additional 10 business days with 

respect to participant contributions for a 

single month. OMB approved the 

paperwork requirements arising from 

the amendment under OMB control 

number 1210–0100. The current 

amendment of 29 CFR 2510.3–102 

contained in this final rule does not 

change the extension procedure or add 

any additional information collection 

requirements, and, accordingly, the 

Department does not intend to submit 

this final rule to OMB for review under 

the PRA. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) imposes 

certain requirements with respect to 

Federal rules that are subject to the 

notice and comment requirements of 

section 553(b) of the Administrative 

Procedure Act (5 U.S.C. 551 et seq.) and 

are likely to have a significant economic 

impact on a substantial number of small 

entities. Unless an agency certifies that 

a final rule is not likely to have a 

significant economic impact on a 

substantial number of small entities, 5 

U.S.C. 604 requires that the agency 

present a regulatory flexibility analysis 

at the time of the publication of the 

notice of final rulemaking describing the 

impact of the rule on small entities. 

Small entities include small businesses, 

organizations and governmental 

jurisdictions. 

For purposes of analysis under the 

RFA, the Employee Benefits Security 

Administration (EBSA) continues to 

consider a small entity to be an 

employee benefit plan with fewer than 

100 participants.20 The basis of this 

definition is found in section 104(a)(2) 

of ERISA, which permits the Secretary 

of Labor to prescribe simplified annual 

reports for pension plans that cover 

fewer than 100 participants. Under 

section 104(a)(3), the Secretary may also 

provide for exemptions or simplified 

annual reporting and disclosure for 

welfare benefit plans. Pursuant to the 

authority of section 104(a)(3), the 

Department has previously issued at 29 

CFR 2520.104–20, 2520.104–21, 

2520.104–41, 2520.104–46 and 

2520.104b–10 certain simplified 

reporting provisions and limited 

exemptions from reporting and 

disclosure requirements for small plans, 

including unfunded or insured welfare 

plans covering fewer than 100 

participants and satisfying certain other 

requirements. 

Further, while some large employers 

may have small plans, in general small 

employers maintain most small plans. 

Thus, EBSA believes that assessing the 

impact of this rule on small plans is an 

appropriate substitute for evaluating the 

effect on small entities. The definition 


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of small entity considered appropriate 

for this purpose differs, however, from 

a definition of small business that is 

based on size standards promulgated by 

the Small Business Administration 

(SBA) (13 CFR 121.201) pursuant to the 

Small Business Act (15 U.S.C. 631 et 

seq.). EBSA requested comments on the 

appropriateness of the size standard 

used in evaluating the impact of the 

proposed rule on small entities in the 

proposal, but no comments were 

received. 

EBSA hereby certifies that the final 

rule will not have a significant 

economic impact on a substantial 

number of small entities. As explained 

above, the provision being added to the 

regulation is a safe harbor, compliance 

with which is wholly voluntary on the 

part of the employer. Because the rule 

creates a safe harbor, rather than a 

mandatory rule, it is unlikely that any 

employer will elect to take advantage of 

the safe harbor if the employer 

concludes that the benefits of complying 

with the safe harbor time limit do not 

exceed the costs of such compliance. 

Therefore, the Department believes that 

most of these small plans will elect to 

take advantage of the safe harbor, 

provided that doing so does not 

significantly increase their costs or that 

any cost increase is offset by reductions 

in other administrative costs attendant 

to compliance uncertainty. 

Unfunded Mandates Reform Act 

Pursuant to provisions of the 

Unfunded Mandates Reform Act of 1995 

(Pub. L. 104–4), this rule does not 

include any Federal mandate that may 

result in expenditures by State, local, or 

Tribal governments, or the private 

sector, which may impose an annual 

burden of $100 million or more. 

Congressional Review Act 

This notice of final rulemaking is 

subject to the Congressional Review Act 

provisions of the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (5 U.S.C. 801 et seq.) and therefore 

has been transmitted to the Congress 

and the Comptroller General for review. 

Federalism Statement 

Executive Order 13132 (August 4, 

1999) outlines fundamental principles 

of federalism and requires the 

adherence to specific criteria by Federal 

agencies in the process of their 

formulation and implementation of 

policies that have substantial direct 

effects on the States, the relationship 

between the national government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government. This rule 

would not have federalism implications 

because it has no substantial direct 

effect on the States, on the relationship 

between the national government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government. Section 

514 of ERISA provides, with certain 

exceptions specifically enumerated, that 

the provisions of Titles I and IV of 

ERISA supersede any and all laws of the 

States as they relate to any employee 

benefit plan covered under ERISA. The 

requirements implemented in this final 

rule do not alter the fundamental 

provisions of the statute with respect to 

employee benefit plans, and as such 

would have no implications for the 

States or the relationship or distribution 

of power between the national 

government and the States. 

List of Subjects in 29 CFR Part 2510 

Employee benefit plans, Employee 

Retirement Income Security Act, 

Pensions, Plan assets. 

■ For the reasons set forth in the 

preamble, the Department amends 

Chapter XXV of Title 29 of the Code of 

Federal Regulations as follows: 

PART 2510—DEFINITION OF TERMS 

USED IN SUBCHAPTERS C, D, E, F, 

AND G OF THIS CHAPTER 

■ 1. The authority citation for part 2510 

continues to read as follows: 

Authority: 29 U.S.C. 1002(2), 1002(21), 

1002(37), 1002(38), 1002(40), 1031, and 1135; 

Secretary of Labor’s Order 1–2003, 68 FR 

5374; Sec. 2510.3–101 also issued under sec. 

102 of Reorganization Plan No. 4 of 1978, 43 

FR 47713, 3 CFR, 1978 Comp., p. 332 and 

E.O. 12108, 44 FR 1065, 3 CFR, 1978 Comp., 

p. 275, and 29 U.S.C. 1135 note. Sec. 2510.3– 

102 also issued under sec. 102 of 

Reorganization Plan No. 4 of 1978, 43 FR 

47713, 3 CFR, 1978 Comp., p. 332 and E.O. 

12108, 44 FR 1065, 3 CFR, 1978 Comp., p. 

275. Sec. 2510.3–38 is also issued under sec. 

1, Pub. L. 105–72, 111 Stat. 1457. 

■ 2. In § 2510.3–102, revise paragraphs 

(a), (b), (c) and (f) to read as follows: 

§ 2510.3–102 Definition of ‘‘plan assets’’— 

participant contributions. 

(a)(1) General rule. For purposes of 

subtitle A and parts 1 and 4 of subtitle 

B of title I of ERISA and section 4975 

of the Internal Revenue Code only (but 

without any implication for and may 

not be relied upon to bar criminal 

prosecutions under 18 U.S.C. 664), the 

assets of the plan include amounts 

(other than union dues) that a 

participant or beneficiary pays to an 

employer, or amounts that a participant 

has withheld from his wages by an 

employer, for contribution or repayment 

of a participant loan to the plan, as of 

the earliest date on which such 

contributions or repayments can 

reasonably be segregated from the 

employer’s general assets. 

(2) Safe harbor. (i) For purposes of 

paragraph (a)(1) of this section, in the 

case of a plan with fewer than 100 

participants at the beginning of the plan 

year, any amount deposited with such 

plan not later than the 7th business day 

following the day on which such 

amount is received by the employer (in 

the case of amounts that a participant or 

beneficiary pays to an employer), or the 

7th business day following the day on 

which such amount would otherwise 

have been payable to the participant in 

cash (in the case of amounts withheld 

by an employer from a participant’s 

wages), shall be deemed to be 

contributed or repaid to such plan on 

the earliest date on which such 

contributions or participant loan 

repayments can reasonably be 

segregated from the employer’s general 

assets. 

(ii) This paragraph (a)(2) sets forth an 

optional alternative method of 

compliance with the rule set forth in 

paragraph (a)(1) of this section. This 

paragraph (a)(2) does not establish the 

exclusive means by which participant 

contribution or participant loan 

repayment amounts shall be considered 

to be contributed or repaid to a plan by 

the earliest date on which such 

contributions or repayments can 

reasonably be segregated from the 

employer’s general assets. 

(b) Maximum time period for pension 

benefit plans. (1) Except as provided in 

paragraph (b)(2) of this section, with 

respect to an employee pension benefit 

plan as defined in section 3(2) of ERISA, 

in no event shall the date determined 

pursuant to paragraph (a)(1) of this 

section occur later than the 15th 

business day of the month following the 

month in which the participant 

contribution or participant loan 

repayment amounts are received by the 

employer (in the case of amounts that a 

participant or beneficiary pays to an 

employer) or the 15th business day of 

the month following the month in 

which such amounts would otherwise 

have been payable to the participant in 

cash (in the case of amounts withheld 

by an employer from a participant’s 

wages). 

(2) With respect to a SIMPLE plan that 

involves SIMPLE IRAs (i.e., Simple 

Retirement Accounts, as described in 

section 408(p) of the Internal Revenue 

Code), in no event shall the date 

determined pursuant to paragraph (a)(1) 

of this section occur later than the 30th 

calendar day following the month in 

which the participant contribution 


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Federal Register / Vol. 75, No. 9 / Thursday, January 14, 2010 / Rules and Regulations 2077 

amounts would otherwise have been 

payable to the participant in cash. 

(c) Maximum time period for welfare 

benefit plans. With respect to an 

employee welfare benefit plan as 

defined in section 3(1) of ERISA, in no 

event shall the date determined 

pursuant to paragraph (a)(1) of this 

section occur later than 90 days from 

the date on which the participant 

contribution amounts are received by 

the employer (in the case of amounts 

that a participant or beneficiary pays to 

an employer) or the date on which such 

amounts would otherwise have been 

payable to the participant in cash (in the 

case of amounts withheld by an 

employer from a participant’s wages). 

* * * * * 

(f) Examples. The requirements of this 

section are illustrated by the following 

examples: 

(1) Employer A sponsors a 401(k) 

plan. There are 30 participants in the 

401(k) plan. A has one payroll period 

for its employees and uses an outside 

payroll processing service to pay 

employee wages and process 

deductions. A has established a system 

under which the payroll processing 

service provides payroll deduction 

information to A within 1 business day 

after the issuance of paychecks. A 

checks this information for accuracy 

within 5 business days and then 

forwards the withheld employee 

contributions to the plan. The amount of 

the total withheld employee 

contributions is deposited with the trust 

that is maintained under the plan on the 

7th business day following the date on 

which the employees are paid. Under 

the safe harbor in paragraph (a)(2) of 

this section, when the participant 

contributions are deposited with the 

plan on the 7th business day following 

a pay date, the participant contributions 

are deemed to be contributed to the plan 

on the earliest date on which such 

contributions can reasonably be 

segregated from A’s general assets. 

(2) Employer B is a large national 

corporation which sponsors a 401(k) 

plan with 600 participants. B has 

several payroll centers and uses an 

outside payroll processing service to 

pay employee wages and process 

deductions. Each payroll center has a 

different pay period. Each center 

maintains separate accounts on its 

books for purposes of accounting for 

that center’s payroll deductions and 

provides the outside payroll processor 

the data necessary to prepare employee 

paychecks and process deductions. The 

payroll processing service issues the 

employees’ paychecks and deducts all 

payroll taxes and elective employee 

deductions. The payroll processing 

service forwards the employee payroll 

deduction data to B on the date of 

issuance of paychecks. B checks this 

data for accuracy and transmits this data 

along with the employee 401(k) deferral 

funds to the plan’s investment firm 

within 3 business days. The plan’s 

investment firm deposits the employee 

401(k) deferral funds into the plan on 

the day received from B. The assets of 

B’s 401(k) plan would include the 

participant contributions no later than 3 

business days after the issuance of 

paychecks. 

(3) Employer C sponsors a selfinsured contributory group health plan 

with 90 participants. Several former 

employees have elected, pursuant to the 

provisions of ERISA section 602, 29 

U.S.C. 1162, to pay C for continuation 

of their coverage under the plan. These 

checks arrive at various times during the 

month and are deposited in the 

employer’s general account at bank Z. 

Under paragraphs (a) and (c) of this 

section, the assets of the plan include 

the former employees’ payments as soon 

after the checks have cleared the bank 

as C could reasonably be expected to 

segregate the payments from its general 

assets, but in no event later than 90 days 

after the date on which the former 

employees’ participant contributions are 

received by C. If, however, C deposits 

the former employees’ payments with 

the plan no later than the 7th business 

day following the day on which they are 

received by C, the former employees’ 

participant contributions will be 

deemed to be contributed to the plan on 

the earliest date on which such 

contributions can reasonably be 

segregated from C’s general assets. 

* * * * * 

Signed at Washington, DC, this 7th day of 

January 2010. 

Phyllis C. Borzi, 

Assistant Secretary, Employee Benefits 

Security Administration, Department of 

Labor. 

[FR Doc. 2010–430 Filed 1–13–10; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[Docket No. USCG–2009–1073] 

RIN 1625–AA00 

Safety Zone; Todd Pacific Shipyards 

Vessel Launch, West Duwamish 

Waterway, Seattle, WA 

AGENCY: Coast Guard, DHS. 

ACTION: Temporary final rule. 

SUMMARY: The Coast Guard is 

establishing a temporary safety zone on 

the West Duwamish Waterway, Seattle, 

Washington. Entry into, transit through, 

mooring or anchoring within this zone 

is prohibited unless authorized by the 

Captain of the Port Puget Sound or her 

Designated Representative. This safety 

zone is necessary to ensure the safety of 

recreational and commercial traffic in 

the area during a vessel launch 

operation at Todd Pacific Shipyards, 

located at the entrance to the West 

Duwamish Waterway. 

DATES: This rule is effective from 1 a.m. 

to 10:30 a.m. on January 16, 2010 unless 

cancelled sooner by the Captain of the 

Port. 

ADDRESSES: Documents indicated in this 

preamble as being available in the 

docket are part of docket USCG–2009– 

1073 and are available online by going 

to http://www.regulations.gov, inserting 

USCG–2009–1073 in the ‘‘Keyword’’ 

box, and then clicking ‘‘Search.’’ They 

are also available for inspection or 

copying at the Docket Management 

Facility (M–30), U.S. Department of 

Transportation, West Building Ground 

Floor, Room W12–140, 1200 New Jersey 

Avenue, SE., Washington, DC 20590, 

between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this temporary 

rule, call or e-mail ENS Rebecca E. 

McCann, Waterways Management 

Division, Sector Seattle, Coast Guard; 

telephone 206–217–6088, e-mail 

Rebecca.E.McCann@uscg.mil. If you 

have questions on viewing the docket, 

call Renee V. Wright, Program Manager, 

Docket Operations, telephone 202–366– 

9826. 

SUPPLEMENTARY INFORMATION: 

Regulatory Information 

The Coast Guard is issuing this 

temporary final rule without prior 

notice and opportunity to comment 

pursuant to authority under section 4(a) 

of the Administrative Procedure Act 


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