Labor Department Seeks Appointment of Independent Fiduciary for Orphaned Pennsylvania 401(k) Plan

Archived News Release — Caution: Information may be out of date.

Pittsburgh, Pennsylvania - The U.S. Department of Labor sued the 401(k) plan of Pannebaker Custom Cabinet Corporation of McAlisterville, Pennsylvania, on January 31, 2003, to obtain a court-appointed independent fiduciary to manage, terminate and distribute to participants and beneficiaries the assets of the company’s orphaned 401(k) plan. Metro Benefits, Inc. of Pittsburgh, agreed to serve as the independent fiduciary of the plan.

“The law states that plans must be managed and operated by employers or plan fiduciaries,” said Mabel Capolongo, regional director of the Philadelphia office of the department’s Employee Benefits Security Administration. “Our case ensures that these workers and their families have someone with authority to transact plan business and distribute its assets to eligible participants.”

Plans become "orphan plans" when they are abandoned by all fiduciaries designated to manage and operate them and their assets. As a result, participants and beneficiaries are unable to receive pension distributions and to make inquiries about their benefits.

Pannebaker Custom Cabinet ceased operations in 1995 and subsequently was decreed bankrupt by the U.S. Bankruptcy Court for the Middle District of Pennsylvania on October 19, 2001. David Runk allegedly resigned as chief executive officer of the company and plan trustee in 1993 and no successor trustee was appointed. As of September 30, 2001, the plan covered 10 participants and had $17,357.38 in assets.

The lawsuit alleges that the 401(k) plan was left without successor fiduciaries to manage, operate and terminate the plan. As a result, participants were unable to obtain pension distributions and communicate with the plan. The suit asks the court to appoint Metro as the independent fiduciary and require that the custodian of the plan’s assets cooperate with the court-appointed fiduciary to terminate the plan and distribute the assets to participants.

The suit, filed in federal district court in Pittsburgh, resulted from an investigation conducted by the Philadelphia regional office of EBSA into alleged violations of the Employee Retirement Income Security Act.

(Chao v. Pannebaker Custom Cabinet Corp. 401(k) Plan)
Civil Action No. 4:03 CV 196

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