U.S. Labor Department Sues to Appoint Trustee for Abandoned Bay Area 401(k) Plan

Archived News Release — Caution: Information may be out of date.

San Francisco, California - The U.S. Department of Labor has filed suit in federal district court in San Francisco seeking the appointment of an independent trustee to manage the abandoned retirement plan of NetActive Corp., formerly of San Francisco. The trustee would terminate the plan and distribute its assets to eligible participants.

NetActive, which ceased doing business by September 2001, failed to administer, terminate and wind up the plan. As of July 2005, the plan had four participants and $18,322 in assets under the custodianship of Transamerica Life Insurance and Annuity Company.

“When a plan is abandoned, so are the workers, who cannot use or reinvest their funds for their retirement,” said Francis Clisham, regional director of the Labor Department’s Employee Benefits Security Administration (EBSA) in San Francisco, which investigated the case. “We are committed to ensuring that participants can access the funds that rightly belong to them.”

In fiscal year 2005, EBSA achieved record monetary results of $1.7 billion related to pension, 401(k), health and other benefits for millions of American workers and their families.

NetActive developed security software for protecting downloadable Internet content before the company’s principals and plan fiduciaries, company president Jeffrey Dodge and chief financial officer Eugidio Nascimento, left the country without terminating the plan. The parent company, NetActive Inc., was headquartered in Toronto, Canada, and had no other U.S.-based operations.

To assist workers in similar situations, the Labor Department instituted new rules last May to facilitate a voluntary, safe and efficient process for winding up the affairs of abandoned plans. The new rules allow financial institutions to take responsibility and distribute the assets of 401(k) plans to affected workers and their families. The department estimates that 1,650 such plans are abandoned each year.

Employers and workers with questions or concerns regarding their private-sector pension and health plans can contact the EBSA regional office in San Francisco at 415.975.4600 or EBSA’s toll free number, 1.866.444.EBSA (3272). Information is also available from the agency’s Web site at www.dol.gov/ebsa.

(Chao v. NetActive Corporation 401(k) Plan)
Civil Action C 06 6429 JSW, United States District Court for the Northern District of California.

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: Deanne Amaden
Phone Number: 415.975.4741