U.S. Labor Department secures appointment of independent fiduciary for profit sharing plan of defunct Hackensack, New Jersey, company

Hackensack, New Jersey — The U.S. Department of Labor has obtained a default judgment appointing Jacqueline Carmichael as the independent fiduciary of the profit sharing plan of defunct Jules Prosnitz & Sons Inc., formerly doing business as Prozy’s Army-Navy Store, in Hackensack. The court order gives Carmichael authority to terminate the plan and distribute approximately $110,178 in assets to five plan participants.

“Companies that go out of business have a legal obligation to terminate employee benefit plans, and ensure that participants and beneficiaries have access to their retirement assets,” said Jonathan Kay, regional director of the department’s Employee Benefits Security Administration (EBSA) in New York.

The judgment resulted from a lawsuit filed by the Labor Department in September 2008 alleging that the company violated the Employee Retirement Income Security Act (ERISA). The suit charged that after the company ceased operations in 2005, the fiduciaries failed to terminate the plan and distribute its assets. As a result, plan participants and beneficiaries were unable to access their individual account balances.

The Labor Department has issued rules to facilitate a voluntary, safe and efficient process for terminating abandoned plans. The rules allow financial institutions holding assets of abandoned plans to take responsibility and distribute the assets to affected workers and their families. In cases where the involved financial institutions decline that role, an independent fiduciary can be appointed to finalize the plan’s business. The department estimates that 1,650 such plans are abandoned each year. Information about the rules is available under the Abandoned Plan Program section of EBSA’s Web site at www.dol.gov/ebsa.

The department’s legal action resulted from an investigation conducted by EBSA’s New York Regional Office. Employers and workers can contact the agency’s New York 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 2008, EBSA achieved monetary results of $1.2 billion related to the pension, 401(k), health and other benefits for millions of American workers and their families.

Solis v. Prozy’s Employees Profit Sharing Plan
Docket Number: 08-cv-4616

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