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Content Last Revised: 12/27/63 |
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Code of Federal Regulations Pertaining to EBSA |
| Labor |
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| Pension and Welfare Benefits Administration, Department of Labor |
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| Temporary Bonding Rules |
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| Criteria for Determining Who Must Be Bonded |
29 CFR 2580.412-5 - Determining when ``funds or other property'' belong to a plan.
- Section Number: 2580.412-5
- Section Name: Determining when ``funds or other property'' belong to a plan.
With respect to any contribution to a plan from any source,
including employers, employees or employee organizations, the point at
which any given item or amount becomes ``funds or other property'' of a
plan for purposes of the bonding provisions shall be determined as
described in this section.
(a) Where the plan administrator is a board of trustees, person or
body other than the employer or employee organization establishing the
plan, a contribution to the plan from any source shall become ``funds or
other property'' of the plan at the time it is received by the plan
administrator. Employee contributions collected by an employer and later
turned over to the plan administrator would not become ``funds or other
property'' of the plan until receipt by the plan administrator.
(b) Where the employer or employee organization establishing the
plan is itself the plan administrator:
(1) Contributions from employees or other persons who are plan
participants would normally become ``funds or other property'' of the
plan at the time they are received by the employer or employee
organization, except however that contributions made by withholding from
employees' salaries shall not be considered ``funds or other property''
of the plan for purposes of the bonding provisions so long as they are
retained in and not segregated in any way from the general assets of the
withholding employer or employee organization.
(2) Contributions made to a plan by such employer or employee
organization and contributions made by withholdings from employees'
salaries would normally become ``funds or other property'' of the plan
if and when they are taken out of the general assets of the employer or
employee organization and placed in a special bank account or investment
account; or identified on a separate set of books and records; or paid
over to a corporate trustee or used to purchase benefits from an
insurance carrier or service or other organization; or otherwise
segregated, paid out or used for plan purposes, whichever shall occur
first. Thus, if a plan is operated by a corporate trustee and no
segregation from general assets is made of monies to be turned over to
the corporate trustee prior to the actual transmittal of such monies,
the contribution represented in the transmission becomes ``funds or
other property'' of the plan at the time of receipt by the corporate
trustee. On the other hand, if a special fund is first established from
which monies are paid over to the corporate trustee, a given item would
become ``funds or other property'' of the plan at the time it is placed
in the special fund. Similarly, if plan benefits are provided through
the medium of an insurance carrier or service or other organization and
no segregation from general assets of monies used to purchase such
benefits is made prior to turning such monies over to the organization
contracting to provide benefits, plan funds or other property come into
being at the time of receipt of payment for such benefits by the
insurance carrier or service or other organization. In such a case, the
``funds or other property'' of the plan would be represented by the
insurance contract or other obligations to pay benefits and would not be
normally subject to ``handling''. Bonding would not be required for any
person with respect to the purchase of such benefits directly from
general assets nor with respect to the
bare existence of the contract obligation to pay benefits. However, if
the particular, arrangement were such that monies derived from, or by
virtue of, the contract did subsequently flow back to the plan, bonding
may be required if such monies returning to the plan are handled by plan
administrators, officers or employees. (Further discussion on bonding of
insured plans is contained in Sec. 2580.412-6(b)(7)).
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