U.S. Department of Labor sues defunct Herndon, Virginia, company to protect participants of 401(k) profit-sharing plan

Herndon, Virginia – The U.S. Department of Labor has sued Answers Inc. and 401(k) trustee Cynthia Chambliss to obtain appointment of an independent fiduciary to manage the plan. Answers Inc. is a defunct company formerly located in Herndon that operated under the names Answer Transit Services LLC and Answer Transit Services Corp.

“We took this legal action to ensure that participants are able to recoup the retirement savings they entrusted to this plan,” said Mabel Capolongo, regional administrator of the department’s Employee Benefits Security Administration (EBSA) in Philadelphia.

The company established the plan in 2005 and managed it until 2006 when the company ceased operations. Since then, Answers Inc. has failed to carry out its fiduciary responsibility to operate and manage the plan and/or appoint a successor to assume that responsibility. As a result, plan participants and beneficiaries are unable to access their individual account balances.

The complaint, filed in the U.S. District Court for the Eastern District of Virginia, Alexandria Division, seeks to remove Answers Inc. and Chambliss as plan fiduciaries, and appoint an independent fiduciary to terminate the plan and distribute plan assets to participants and beneficiaries.

As of December 31, 2007, the plan had 18 participants and $35,000 in assets.

The suit resulted from an investigation conducted by EBSA’s Washington District Office. In fiscal year 2007, EBSA achieved monetary results of $1.5 billion related to the pension, 401(k), health and other benefits for millions of American workers and their families. Employers and workers may contact EBSA’s Washington office at 202.693.8700 or toll-free at 866.444.3272 for help with problems relating to private sector pension and health plans.

Employers with similar problems who are not yet the subjects of investigations by EBSA may be eligible to participate in the department’s Voluntary Fiduciary Correction Program. Participation in the program requires employers to correct any violations but allows them to avoid EBSA enforcement actions and civil penalties as well as any applicable excise taxes. For more information, visit www.dol.gov/ebsa.

Secretary of Labor v. Answers Inc. et. al
Civil Action No. 1:09-cv-92

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