Accounting Web’s story, Unpaid Trust Fund Taxes Are Serious Business, was about how some business engage in “pyramiding”, the practice of repeatedly withholding trust fund taxes from employees but intentionally failing to send them to the IRS. They’re called ‘trust fund’ taxes because it’s the obligation of employers to hold the employee’s money in trust until they deposit it with the government. Failure to do so in a timely manner can subject the business and the individuals involved to penalties and interest.
Now substitute "plan assets" for "trust fund taxes" and "Department of Labor" for "Internal Revenue Service" and it’s about the same thing: an employer "borrowing" employee money to run the business. Some employers pay it back, others go out of business. And like the Internal Revenue Service, the Department of Labor takes this matter seriously.
But while employees usually have no way of confirming payroll tax deposits, the magic of technology makes it easy to go online with a daily valuation plan to check to see when their 401(k) contributions hit their accounts. Consistently late 401(k) deposits can be a red flag for an employer having financial problems.