Short answer: Employee contributions become plan assets as of the earliest date they can reasonably be separated from the employer’s general assets, and for a health or other welfare plan that can be no later than 90 days after the employer receives or withholds them.
Under the Department of Labor’s plan-asset rule, amounts employees pay to the employer or have withheld from wages for a plan become plan assets as of the earliest date they can reasonably be segregated from the employer’s general assets. For welfare plans, that date may never be later than 90 days after the employer receives the money or the date it would otherwise have been paid to the employee in cash.
The 90 days is an outer limit, not a grace period. Once employee money is plan money, ERISA’s fiduciary duties apply to it: it must be used for benefits and reasonable plan expenses, not general business purposes.
This matters for self-funded and level-funded plans that hold employee contributions in the company’s account, and for any surplus or refund partly funded by employees. Benefits counsel can confirm the right handling, including whether a trust is needed.