U.S. Labor Department action clears way to distribute $60,000 in 401(k) assets to former employees of defunct Fremont, California hi-tech company

Archived News Release — Caution: Information may be out of date.

San Francisco – The U.S. Department of Labor has obtained a default judgment appointing an independent fiduciary to distribute $60,000 in assets from an abandoned 401(k) profit-sharing plan to 15 former employees of Zoltrix Inc., a defunct Fremont, California-based manufacturer and distributor of computer components.

The order gives the fiduciary, Larry Lefoldt, of Lefoldt & Co., authority to distribute the assets to participants and beneficiaries before terminating the plan. Zoltrix ceased operating in early 2001 without appointing an individual to serve as a trustee or administrator of the plan. The company abandoned the plan after it went out of business. Plans become “orphan plans” when they are abandoned by fiduciaries designated to manage and operate them and their assets.

“Abandoning this 401(k) plan resulted in abandoning the workers who invested their retirement savings in it,” said Francis C. Clisham, regional director for the Labor Department’s Employee Benefits Security Administration (EBSA) in San Francisco. “We took this legal action so the plan participants can access their retirement funds.”

This judgment follows a lawsuit filed by the department in January 2007, alleging that plan participants were unable to access their plan accounts or receive benefit distributions because neither the company president, Jimmy Wong, nor anyone else with authority to administer the plan could be located.

To assist workers in similar situations, the Labor Department instituted new rules in May 2006 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.

This legal action resulted from an investigation conducted by EBSA’s San Francisco Regional Office. 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. Employers and workers can contact the agency’s San Francisco office at 415.625.2481 or EBSA’s toll-free number, 1.866.444.EBSA (3272), for help with problems relating to private sector pension and health plans.

Chao v. Zoltrix, Inc. and Zoltrix Inc. 401(k) Profit Sharing Plan
Civil Action 3:07-CV-0610-WHA, United States District Court for Northern District of California

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Archived News Release — Caution: Information may be out of date.