U.S. Labor Department sues to appoint independent fiduciary for 401(k) plan abandoned by Long Island, New York company

Archived News Release — Caution: Information may be out of date.

New York – The U.S. Department of Labor has sued in the U.S. District Court for the Eastern District of New York to obtain appointment of an independent fiduciary to oversee the abandoned 401(k) plan of defunct Freedom Security Systems Inc. of New Hyde Park, New York.

The Freedom Security Systems Inc. 401(k) Plan was sponsored by the company until it ceased operations around August 2006. At that point, Ilene Maggio, the last known fiduciary of the plan, stopped performing her duties without ensuring the appointment of a new fiduciary to oversee distribution of the plan’s assets.

As a result, former employees were unable to access their 401(k) accounts. Under the Employee Retirement Income Security Act (ERISA), employee benefit plans must be managed by named fiduciaries. In the absence of a plan fiduciary, participants and beneficiaries cannot obtain plan information, make investments or collect retirement benefits.

The Labor Department’s suit asks the court to appoint an independent fiduciary to administer the plan, distribute its assets to participants and beneficiaries, and oversee the plan’s termination. American Funds is custodian of the plan’s funds, which were valued at approximately $369,440.75 as of December 11, 2006, the latest data available.

“We want workers to know that they can turn to the Labor Department for assistance when they find themselves in this type of situation,” said Jonathan Kay, regional director in New York City for the Labor Department’s Employee Benefits Security Administration (EBSA). “We took this legal action to ensure that the plan is properly managed and its participants gain access to their retirement assets.”

The suit resulted from an investigation by EBSA’s regional office in New York City. Employers and workers can contact the office at 212.607.8600 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. Freedom Security Systems Inc. 401(k) Plan
Civil Action Number: 08-CV-3146

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Archived News Release — Caution: Information may be out of date.