ROANOKE TIMES
Copyright (c) 1995, Roanoke Times
DATE: Tuesday, December 12, 1995 TAG: 9512120055
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Knight-Ridder/Tribune
Employers will have less time to transfer employee contributions to 401(k) retirement plans under a U.S. Labor Department rule introduced Monday.
The new rule will give employers the same amount of time as they now have to transfer Social Security payments and income tax withholdings.
The change is being made because some employers were taking advantage of the old rule, under which they had 90 days to transfer contributions to 401(k) plans, Labor Secretary Robert Reich said at a news conference.
Previously, some employers saw the rule as ``providing a 90-day loophole that allows them to hold the funds as a kind of permanent interest-free loan amounting to three months worth of employee contributions,'' Reich said.
No more.
Under the new rule, Reich said ``most large companies will have to deposit 401(k) contributions within one day after they are received. Smaller companies will have a longer period of time, depending on their size, but almost all will have to deposit employee contributions within 30 days.''
The rule will go into effect in 90 days, allowing for a comment period from affected companies, Reich said.
The rule change comes following a Labor crackdown on misuse of 401(k) funds. More than 300 formal investigations are open on the department's books, Reich said, noting that in the two weeks since the crackdown was announced, 35 new cases have been brought, of which two are being prosecuted. One company already has pleaded guilty.
LENGTH: Short : 38 linesby CNB