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actions taken by the employer with respect to the participant contributions that become plan

assets, other than the actual contribution of such assets to the employee benefit plan’s trust or

the actual payment of welfare benefits for employees, would be a violation of ERISA section

406(b)(1) and (2).

Although the failure to forward participant contributions in a timely fashion would not, in

itself, constitute an extension of credit between the plan and the employer in violation of

section 406(a)(1)(B), depending on the particular facts and circumstances, a separate

arrangement, agreement or understanding to extend credit to pay the delinquent amounts to

the plan could occur that would give rise to a violation of section 406(a)(1)(B). Such

arrangement, agreement or understanding could be express or implied. For example, a

fiduciary’s consistent failure to exercise diligence in its collection efforts regarding participant

contributions may serve as the basis to assert that an implied understanding existed to extend

credit between the fiduciary and the employer.

Can delinquent transmittal of participant loan repayments be included on Line 4a,

or must they be reported as nonexempt prohibited transactions on Line 4d and

Schedule G?

In Advisory Opinion 2002-02A, the Department stated that participant loan repayments paid

to or withheld by an employer for purposes of transmittal to an employee benefit plan are

sufficiently similar to participant contributions to justify, in the absence of regulations

providing otherwise, the application of principles similar to those underlying the participant

contribution regulation for purposes of determining when such repayments become assets of

the plan. Delinquent forwarding of participant loan repayments is eligible for correction under

the VFCP and PTE 2002-51 on terms similar to those that apply to delinquent participant

contributions. Accordingly, the Department will not reject a 2003 Form 5500 report based

solely on the fact that delinquent forwarding of participant loan repayments is included on

Line 4a of the Schedule H or Schedule I. Filers that choose to include such participant loan

repayments on Line 4a must apply the same supplemental schedule and IQPA disclosure

requirements to the loan repayments as apply to delinquent transmittals of participant

contributions.

Who should I contact if I need more information or if I have additional questions?

Questions concerning this guidance may be directed to the EFAST Help Line at

1-866-463-

3278, Monday through Friday from 8:00 am to 8:00 pm, Eastern Time.

Faqs About Reporting Delinquent Participant Contributions On The Form 5500 - U.s. Department Of Labor Page 5