U.S. Labor Department reaches agreement restoring funds to Wixom, Michigan based 401(k) plan

Archived News Release — Caution: Information may be out of date.

Wixom, Michigan – The U.S. Department of Labor has reached agreement with William G. Kennedy, former vice president of Kennedy Boring and Machine Inc. in Wixom, to pay $23,206.05 to the company’s 401(k) plan and removing him as a fiduciary to the plan, resolving a lawsuit filed by the department.

In a consent judgment filed in federal district court in Detroit, Kennedy agreed to pay the funds after having failed to forward employee contributions and loan repayments to the company’s 401(k) plan during a period of more than two years. Failing to forward such contributions and repayments in a timely manner is a violation of the Employee Retirement Income Security Act (ERISA). Kennedy also has agreed to forfeit his own 401(k) funds to offset any lost opportunity costs due the participants in the plan.

“The department will act when plan fiduciaries fail to carry out their duty to protect the retirement plan assets held on behalf of participants,” said Joseph Menez, director of the Labor Department’s Employee Benefits Security Administration (EBSA) regional office in Cincinnati.

The company ceased operation in December 2002 and was dissolved by the state of Michigan in 2006. Assets held in individual 401(k) plan accounts were never distributed to the rightful owners.

The consent judgment also allows the court to appoint an independent fiduciary who will liquidate the plan and distribute assets as appropriate.

Employers with similar problems who are not yet subjects of EBSA investigations may be eligible to participate in the department’s Voluntary Fiduciary Correction Program (VFCP). Participation requires employers to make workers whole 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.

This suit resulted from an investigation conducted by EBSA’s Cincinnati Regional Office. Employers and workers can reach the office at 859.578.4680 or toll-free at 1.866.444.EBSA (3272) for help with problems relating to private sector retirement and health plans. In fiscal year 2006, EBSA achieved monetary results of $1.4 billion related to pension, 401(k), health and other benefits for millions of American workers and their families.

Chao v. Kennedy
Civil Action Number 2:07cv10772

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 202.693.7828 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.