Alabama Executive To Restore Money To 401(K) Plan Participants

Archived News Release — Caution: Information may be out of date.

The U. S. Department of Labor has obtained a final settlement in which the executive director of Community Action Agency of Calhoun, Cleburne & Cherokee Counties, Inc. (CAA) agreed to pay an additional $5,034.50 to participants of the corporation’s Anniston, Ala. 401(k) plan.

Dr. Nimrod Q. Reynolds, who served both as an executive of the non-profit corporation and trustee of the 401(k) plan, agreed to have his own plan account offset to restore the plan assets. The money will be redistributed to the remaining participants on a prorated basis. Reynolds also was permanently barred from serving in a fiduciary capacity to any employee benefit plan subject to the Employee Retirement Income Security Act (ERISA).

The money represents employee contributions totaling $3,517.55 not remitted to the plan for pay periods in October 1996 and for the interest the plan would have earned as of Nov. 30, 1999.

An earlier partial settlement in November 1999 resulted in $9,000 being recouped for the plan and resolved a restitution issue concerning employee contributions of $8,331.82 not remitted to the plan for the period of April 30, 1997 to June 30, 1997, as well as interest which would have accrued.

CAA, the plan sponsor, was sued July 8, 1999, for failure to timely remit more than $11,000 of employee contributions to the plan.

CAA employees were required to contribute five percent of their compensation to the plan, which began operating in April 1992. On Aug. 31, 1995, the plan had 95 participants and assets totaling $340,131. The department alleged the company violated ERISA when it used the employees’ contributions to finance CAA’s operations.

“Our goal is to assure that consumers know that the department is only a phone call away to help protect the benefits promised by employers," said Howard Marsh, director of the Atlanta Regional Office of the Labor Department’s Pension and Welfare Benefits Administration (PWBA). “Employers and workers can reach us at 404/562-2156 for help with any problems relating to private-sector pension and health plans.”

The settlement was the result of an investigation conducted by the Atlanta Regional Office of the Labor Department’s Pension and Welfare Benefits Administration. The settlement was entered in federal district court in Birmingham, Ala. on April 13.

(Herman v. Community Action Agency of Calhoun, Cleburne & Cherokee Counties)
Civil Action No. CV-99-H-1747-E

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Archived News Release — Caution: Information may be out of date.