U.S. Labor Department Sues to Restore Contributions and Lost Earnings to Former Lexington, Kentucky, Company’s SIMPLE IRA Plan

Archived News Release — Caution: Information may be out of date.

Lexington, Kentucky - The U.S. Department of Labor has sued the former owner of the Pearce-Phelps Roofing Co., Lexington, Kentucky, to recover delayed and missing employee contributions plus any lost earnings for the company’s SIMPLE IRA employee benefit plan.

“The department will act when plan officials fail to carry out their duty to protect the assets held to pay benefits of plan participants,” said Joseph Menez, director of the department’s Cincinnati regional office of the Employee Benefits Security Administration (EBSA).

The lawsuit alleges that Kyle Grannis McCarty, former company owner and president, violated the Employee Retirement Income Security Act (ERISA) from August 2001 through March 2004. He allegedly failed to timely remit to the plan contributions deducted from workers’ paychecks.

Filed in federal district court in Lexington, the suit seeks an order requiring McCarty to restore all outstanding contributions plus lost earnings owed to the plan and permanently bar him from serving as a fiduciary for any plan covered by ERISA.

While it was in business, Pearce-Phelps was a roofing installation and service provider. The company’s SIMPLE IRA plan had 29 participants and $49,668 in contributions as of March 2004.

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.

The case resulted from an investigation conducted by the EBSA’s Cincinnati regional office. 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. Employers and workers can reach the Cincinnati office at 859.578.4680 or through EBSA’s toll-free number, 1.866.444.EBSA (3272), for help with problems relating to private-sector retirement and health plans.

(Chao v. Kyle Grannis McCarty and Pearce-Phelps Roofing)
Civil Action No. 5:06-278-KSF

U.S. Department of Labor news releases are accessible on the Department's Newsroom page. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the COAST office. Please specify which news release when placing your request at 202.693.7765 or TTY 202.693.7755. The U.S. Department of Labor is committed to providing America's employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit the Department's Compliance Assistance page.

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

Contact Name: Dan Fuque
Phone Number: 404.562.2078