WH-347 Fringe Benefits: Funded vs. Unfunded Explained

Fringe shows up on page 1 as a number and on page 2 as an explanation. Page 1 column (6B) is the total fringe benefit credit per hour and column (6C) is any payment made in lieu of fringe benefits. Page 2 then breaks the (6B) figure down. The form states the relationship plainly in its own instruction: "If an amount is listed in (6B) on the first page of this certified payroll form, enter the hourly credit claimed under each plan name, type and number for each worker and check whether the plan is funded or unfunded." So if (6B) has a number in it, page 2 has to account for that number.

A funded plan is one where the contractor makes irrevocable contributions to a third party — a trustee or an insurer — who holds the money and provides the benefit. Health and welfare funds, pension trusts and jointly administered apprenticeship training funds are the common examples. The money leaves the contractor's control. On the form you tick Funded for that plan column and state the hourly credit claimed.

An unfunded plan is one the contractor provides directly rather than through a third party — a self-administered benefit paid out of general assets. The regulation contemplates this: 29 CFR 5.5(a)(3)(i) requires records of "rates of contributions or costs anticipated for bona fide fringe benefits", and the word anticipated is doing work there. For an unfunded plan you are claiming credit for a cost you expect to incur rather than money you have already paid out, which is why the form asks you to distinguish the two. Unfunded arrangements attract more scrutiny for exactly that reason, and the Department has specific requirements for taking credit for them — worth confirming with your agency or counsel before relying on an unfunded credit.

If you discharge the fringe obligation in cash rather than into a plan, that money is paid in addition to the base hourly rate, not folded into it. That is why the form gives it its own column, (6C) PAYMENT IN LIEU OF FRINGE BENEFITS, separate from (6A) the hourly wage rate. Rolling cash-in-lieu into the base rate makes a payroll look compliant on a single number while understating the base against the wage determination — one of the more common ways a payroll reconciles internally and still fails review.

This is the structural point people miss. The credit table has six plan columns and eight worker rows, and the plan identity — FB NAME, FB TYPE, PLAN NO., and the funded/unfunded tick — is entered once at the head of each column. Only the hourly credit varies per worker. So the limit of six applies to the distinct plans on the sheet, not to any single worker's benefits. A crew of eight where two trades sit on different health, pension and training funds can exceed six distinct plans without any individual worker having more than three.

Since sheets hold eight workers each, a larger payroll already runs onto multiple sheets — and each sheet has its own six columns. Grouping workers so that the people on the same benefit package land on the same sheet will often bring a payroll back within the form. If it genuinely cannot be made to fit, that is a conversation to have with your contracting agency rather than something to solve by leaving a plan off, because the total credit you claim in (6B) has to be accounted for.

Whatever your plan mix, the numbers have to reconcile. The total hourly credit column on page 2 should equal the sum of the individual plan credits for that worker plus any cash in lieu, and that total is what appears in (6B) on page 1. A reviewer can do that addition without knowing anything about your business, which makes it one of the first checks run. If the parts do not sum to the total, the payroll is going back regardless of whether the underlying benefits were paid correctly.

One area to be careful in. Where a benefit is provided for both prevailing wage and private work, the hourly credit claimed on a Davis-Bacon job generally cannot exceed what the contribution actually works out to across all hours worked. This is usually discussed as annualisation, and it most often bites on plans like pension or vacation where contributions are made on a basis other than hours worked on the covered job. It is genuinely technical, the rules are not fully answerable from the form, and it is the part of this section worth getting advice on rather than reasoning through from first principles.