Labor Department Sues Alexandria, Minnesota SIMPLE IRA Plan Official for Delinquent Contributions

Archived News Release — Caution: Information may be out of date.

Minneapolis, Minnesota - The U.S. Department of Labor has filed a lawsuit against the fiduciary of the Double A Electric, Inc. SIMPLE IRA Plan of Alexandria, Minnesota for failing to forward employee withholdings to the IRA accounts of individual participants.

“This action demonstrates our commitment to protect the hard-earned benefits of American workers," said Gregory Egan, director of the department’s Kansas City Regional Office of the Pension and Welfare Benefits Administration, which investigated the violations of the Employee Retirement Income Security Act (ERISA).

The department’s complaint, filed August 12 in federal district court in Minneapolis, alleged that company president, Loren Koenen, who also served as the plan’s fiduciary, failed to forward to the plan $9,997.50 in contributions withheld from employees’ paychecks from January 2000 to November 2000, using the money to benefit the company. The department is seeking payment of the contributions plus interest.

The company filed for Chapter 7 bankruptcy protection March 27, 2001 in the U.S. Bankruptcy Court for the District of Minnesota in Fergus Falls, Minnesota. The plan, which was adopted in February 1999, had 17 participants. The plan has not been terminated. The department filed a proof of claim on December 17, 2001 in the federal bankruptcy court for $10,517 against the company, which includes lost interest.

Egan noted that employers with similar problems, who are not yet the subject of an investigation by PWBA, may be eligible to participate in the Department’s Voluntary Fiduciary Correction Program (VFCP). Participation in the VFCP requires employers to make workers whole, but allows them to avoid PWBA enforcement actions and civil penalties, as well as excise taxes.

“The VFCP gives plan sponsors a way to come into compliance with ERISA by restoring workers’ benefits while avoiding an investigation by PWBA,” said Egan. “It protects workers’ health and retirement benefits and allows us to focus our resources on those who seek to avoid compliance.” For more information about the VFCP see www.dol.gov/pwba.

Employers and workers can contact the Kansas City Regional Office at 1.816.426.5131 or PWBA’s Toll-Free Employee & Employer Hotline number, 1.866.275.7922, for help with problems relating to private-sector pension and health plans.

(Chao v. Loren Koenen
Civil Action No. 02-CV-2899)

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