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Bill E

Company Not Depositing My Funds!

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457b questions

 

Here’s my situation... I work for a rural California district hospital that offers a 457b plan. The hospital is currently almost 5 months behind in regard to the depositing of employee contributions (the last deposit was for the pay period of 6/16/2011). This conduct has been an ongoing M. O. for as long as I have been employed here (3 plus years), but I don’t believe it has ever been quite this far behind. I’m beginning to get a little bit concerned that the slope has become a bit slippery.

 

I recently contacted the San Francisco office of the Labor Department. I was told by them that I needed to get a copy of my facility’s SPD in order to determine if the 457b is subject to ERISA enforcement. The SPD makes no mention of being subject to ERISA rules, so the Labor Dept told me I needed to find out from my plan administrator if our 457b is subject to ERISA rules and regulations. For obvious reasons, I am uncomfortable approaching our plan people with this whole subject.

 

Suggestions?

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Is the hospital a government employer, or a non-profit corporation?

 

The answer makes a big difference. Of course, the plan's document might have a more strict requirement than the law and regulations require, but the rules say:

 

For a governmental 457(b) plan, deposits of employee elected salary deferrals must be occur in a reasonable time for proper administration of plan, not later than 15th business day of next month. The funds must be in a trust.

 

But for a tax-exempt 457(b) plan (the plan is sponsored by a non-profit non-government entity), there is no deadline because the assets are employer assets. The funds must NOT be in a trust - must remain an employer asset (no protection from creditors like you get in a trust).

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Also, let me clarify, the "15 day" quote is not a rule, it's an example.

 

1.457(b)-8(a)(2)(ii):

 

 

 

Amounts deferred under an eligible governmental plan must be transferred to a trust within a period that is not longer than is reasonable for the proper administration of the participant accounts (if any). For purposes of this requirement, the plan may provide for amounts deferred for a participant under the plan to be transferred to the trust within a specified period after the date the amounts would otherwise have been paid to the participant.

 

For example,
the plan could provide for amounts deferred under the plan at the election of the participant to be contributed to the trust within 15 business days following the month in which these amounts would otherwise have been paid to the participant.

 

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