Revisiting the Employer’s Fiduciary Duty to “Get That Money to the Plan”Benefits Law Journal Spring 2016
Lee T. Polk, Of Counsel in the firm’s Employee Benefits practice, in the firm’s Chicago office, authored an article in Benefits Law Journal titled “Revisiting the Employer’s Fiduciary Duty to ‘Get That Money to the Plan.’”
Following is an excerpt (see below to download the full article in PDF format):
Fortunately, this article will not apply to the vast majority of plan sponsors and fiduciaries. But there is a higher likelihood that counsel and other plan service providers—those who are involved with many client plans—may observe the abuse of plan monies. Particularly in the case of employees’ cash, whether payroll deductions intended for a 401(k) plan or funds to satisfy premiums to a health plan, such assets are sacrosanct. Most employers would never divert payroll deductions, but service providers involved with many plans may occasionally observe such conduct.
Employee benefits professionals are well aware of the fiduciary duty of employers to transfer contributions to the plan in a timely manner. Sometimes the deadline to make employer contributions is driven by tax rules. But as suggested previously, contributions to a plan are often attributable to payroll deductions and are subject to fiduciary rules because they do not “belong” to the employer.