U.S. Labor Department Lawsuit Seeks Independent Fiduciary For Abandoned Naples, Fla., 401(k) Plan

Archived News Release — Caution: Information may be out of date.

Atlanta - The U.S. Department of Labor has filed a lawsuit seeking the removal of former K & M Plumbing Contractors, Naples, Fla., as fiduciary of its abandoned 401(k) plan. The suit also asks the court to appoint an independent fiduciary to manage the plan.

"The law states that plans must be managed and operated by employers or plan fiduciaries," said Howard Marsh, director of the Atlanta regional office of the Employee Benefits Security Administration (EBSA). "Our case is aimed at assuring that workers and their families have someone with authority to conclude plan business and distribute its assets to eligible participants."

According to the department's suit, filed under the Employee Retirement Income Security Act, the plan had 20 participants and assets of approximately $4,694 when it was abandoned in March 2002.

Filed in U.S. District Court in Tampa, the suit alleges that the company failed to administer the plan and effectively abandoned it. As a result of the abandonment, participants allegedly are unable to gain access to their funds. Plans officially become "orphan plans" when they are abandoned by all fiduciaries designated to manage and operate them and their assets.

Employers with similar problems, who are not yet the subject of an investigation by EBSA, may be eligible to participate in the department's Voluntary Fiduciary Correction Program (VFCP). Participation in the VFCP requires employers to correct violations of the law but allows them to avoid EBSA enforcement actions and civil penalties as well as any applicable excise taxes. For more information about the VFCP, see www.dol.gov/ebsa.

EBSA's Atlanta regional office investigated the case. Employers and workers can contact the office at (404) 562-2156 or EBSA's toll-free number, 1-866-444-EBSA (3272), for help with problems relating to private-sector pension and health plans. In fiscal year 2005, EBSA achieved monetary results of $1.7 billion related to the pension, 401(k), health and other benefits for millions of American workers and their families.

(Chao v. K & M Plumbing Contractors)
Civil Action No. 8:06-cv-00997-JDW-MSS

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Archived News Release — Caution: Information may be out of date.

Contact Name: Dan Fuqua
Phone Number: 404.562.2078