U.S. Labor Department obtains appointment of independent fiduciary for abandoned 401(k) plan of Waterbury, Connecticut company

Archived News Release — Caution: Information may be out of date.

New Haven – The U.S. Department of Labor has obtained a federal court order appointing an independent fiduciary to manage the abandoned 401(k) plan of defunct VA Construction LLC of Waterbury, Connecticut.

The VA Construction, LLC 401(k) Plan was sponsored by the company until early 2001 when the company ceased operations. At that time, the plan’s fiduciaries stopped performing their duties and failed to appoint a successor fiduciary to perform those functions. Under the Employee Retirement Income Security Act, employee benefit plans must be managed by plan fiduciaries. In the absence of a fiduciary, participants and beneficiaries cannot obtain plan information, make investments or collect retirement benefits.

In January 2008, the Labor Department sued in the U.S. District Court for the District of Connecticut to obtain appointment of an independent fiduciary to manage the plan. Named as defendants were Vernon Austin and Vincent Austin, who were co-owners of the company and trustees of the plan. The suit alleged that the defendants failed to properly administer the plan, including the failure to distribute plan assets to eligible participants and beneficiaries, and to properly terminate the plan.

The department obtained a consent judgment appointing Pension Consultants Inc. as the independent fiduciary of the plan, with authority to administer the plan, distribute its assets to participants and beneficiaries, and terminate the plan.

Plans become “orphan plans” when they are abandoned by all fiduciaries legally designated to manage and operate them. The VA Construction, LLC 401(k) Plan has nine participants and $12,534.13 in assets, according to the latest data available. John Hancock is the custodian of the funds.

“This legal action should demonstrate that the Labor Department will take whatever steps necessary to protect the rights of even a small group of plan participants by initiating litigation when necessary,” said James Benages, regional director of the department’s Employee Benefits Security Administration (EBSA) in Boston.

The suit resulted from an investigation conducted by EBSA’s Boston office. Employers and workers in the six New England states, as well as upstate and western New York can contact that office at 617.565.9600 or toll-free at 866.444.3272 for help with problems relating to private sector pension and health plans. In fiscal year 2007, EBSA achieved monetary results of $1.5 billion related to pension, 401(k), health and other benefits for millions of American workers and their families. Additional information can be found at www.dol.gov/ebsa.

Chao v. Vernon Austin and Vincent Austin
Civil Action Number: 3:08-CV-0088 (RNC)

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