What The Department Of Labor Said About Cafeteria Plan Contributions In 1992
A 1992 Department of Labor release says it will not assert a trust violation for cafeteria plan contributions. It is narrow and old, and it is easy to overstate.
What The Release Covers.
General information, not legal or tax advice. Check the cited sources before you act.
Participant Contribution Timing Overview
Start here for the full set of timing rules and open points.
Section 125 Cafeteria Plans and HSAs
The employer guide to cafeteria plan design and compliance.
The 90-Day Limit And The 7-Day Safe Harbor
The timing rules the release does not mention.
The Text Of The Release.
Technical Release 92-01 was signed on May 28, 1992 and superseded Technical Release 88-1. It applies to cafeteria plans under Internal Revenue Code section 125 and to other contributory welfare plans that apply participant contributions only to premiums.
For cafeteria plans, the Department said it will not assert a violation in an enforcement proceeding solely because participant contributions were not held in trust. ERISA section 403(a), 29 U.S.C. 1103(a), is the general trust requirement, and section 403(b) lists exceptions such as insurance contracts issued by a licensed insurer.
The release also addresses reporting. A cafeteria plan that loses a reporting exemption solely because it uses participant contributions to pay plan benefits will not be assessed a civil penalty on that basis. For a premium-only plan, the reporting exemptions stay available if contributions are used to pay premiums within three months of receipt.
What The Release Leaves Alone.
The release states that it does not relieve fiduciaries of the duty to ensure contributions are used only for plan benefits and reasonable administrative expenses. It adds that other uses may bring civil sanctions under ERISA Title I and criminal sanctions under 18 U.S.C. 664, the federal statute on theft or embezzlement from an employee benefit plan.
It speaks to the trust requirement and to certain reporting penalties. The Department’s page does not mention the 90-day or seven-business-day timing rules, and we found no statement that the release changes how the plan-asset regulation applies. Read it as relief from one obligation, the trust, and not as permission to hold employee money for as long as an employer likes.
How To Use This Carefully.
Confirm whether your arrangement is a cafeteria plan under section 125 or a premium-only plan, because the release is written for those cases and not for plans that use contributions for other benefit payments.
Keep the three-month point in mind for premium-only plans. Paying premiums within three months of receipt is the stated condition for keeping the reporting exemptions.
Ask your benefits counsel whether anything in your plan documents or your carrier contracts calls for a trust or a separate account regardless of the Department’s enforcement position.
Status And Limits.
It is an enforcement policy, not a statute or a regulation. By its own terms it stayed in effect until the earlier of December 31, 1993 or the adoption of final regulations granting relief. The Department’s page does not say whether it was formally extended or replaced.
A Federal Register document from November 25, 1997 describes the release as the Secretary’s position and cites a 1993 Federal Register notice for it. We could not retrieve that 1993 notice, so we cannot confirm the release’s current status from a primary source. Treat it as long-standing but dated guidance and verify before relying on it.
A statement of what the Department will not assert tells you about the Department’s enforcement. We did not verify how a court would treat a participant’s own claim, so do not assume the release closes that door.
Related Rules And Tools.
Section 125 Cafeteria Plans and HSAs
The employer guide to cafeteria plan design and compliance.
ERISA Fiduciary Duties for Employer Health Plans
Who is a fiduciary and what loyalty and prudence require.
ERISA Compliance for Michigan Employers
A broader view of ERISA duties for Michigan plan sponsors.
Laws And Sources
DOL Technical Release 92-01: The 1992 DOL enforcement policy for cafeteria plans and other contributory welfare plans.
ERISA Section 403, 29 U.S.C. 1103: Trust requirement and the rule that plan assets never inure to an employer.
18 U.S.C. 664: Federal crime of theft or embezzlement from an employee benefit plan.
Federal Register, November 25, 1997: DOL final rule amending 2510.3-102, with a footnote describing Technical Release 92-01.
General information, not legal or tax advice. Check the cited sources before you act.
Quick Answers.
Short replies on this page’s topic, each tied to a fuller guide.
Does Technical Release 92-01 mean cafeteria plan contributions are not plan assets?
No. The release addresses the trust requirement and certain reporting penalties. It says fiduciaries must still ensure contributions are used only for plan benefits and reasonable expenses.
Is Technical Release 92-01 still in effect?
The release says it lasts until the earlier of December 31, 1993 or final regulations, and the Department’s page does not say whether it was extended. A 1997 Federal Register document still describes it as the Department’s position. We could not confirm its current status, so check with counsel.
Does the release change the 90-day limit?
We found nothing in the release that mentions the 90-day or seven-business-day timing rules. The plan-asset regulation continues to say when contributions become plan assets.
The Rest Of This Series.
When Payroll Deductions Become Plan Assets
The plan-asset definition and the reasonably-segregable standard.
The 90-Day Limit And The 7-Day Safe Harbor
Who each outer limit covers.
Fiduciary Exposure And Correction
Liability, penalties and the correction program.
Payroll To Carrier Remittance Checklist
A pay-period process that can be audited.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
Switch to CFH. Unhappy with your broker? Your employees won’t notice. You will. →
Cookies on This Site
We use cookies to keep the site working properly and to understand how it is used. You can decline anything that is not essential. See our Privacy Policy for the detail.
- Essential — needed for the site to load and for you to move around it. These cannot be switched off.
- Analytics — tell us which pages get read, so we know what is worth writing more of.
- Advertising — set by third parties such as ad and social platforms to measure and target campaigns.