One of the key responsibilities that employers have to their employees under the Employee Retirement Income Security Act (ERISA) is their fiduciary duty to look after their retirement plan contributions.
According to the U.S. Department of Labor (DOL), which is responsible for overseeing ERISA, that means they’re required to act “solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses.”
Company ordered to pay over $60,000
Earlier this month, the DOL announced that Gibson Television Service Inc., a television and video service company in Michigan, had been ordered by a federal judge to pay over $50,000 in payroll-deducted retirement contributions and over $10,000 in penalties for violating the law from 2016 through 2019.
The company had been under investigation by the Employee Benefits Security Administration (EBSA), which is part of the DOL. The investigation found that the two officers of the company who were the retirement plan’s fiduciaries “failed to remit and/or forward employee contributions” to the company’s 401(k) plan “in a timely manner.”
Independent fiduciary appointed
In the judge’s consent order and judgment, she appointed an outside company to be an independent fiduciary for the plan and authorized it to reallocate the “unremitted funds and lost opportunity costs” to the “remaining participants and beneficiaries of the plan to ensure the participants’ individual plan accounts receive all amounts they were owed as a result of the fiduciary breaches.” The new fiduciary will then terminate the plan.
The two officers of the company who were the plan’s fiduciaries (and the defendants in the case) are no longer allowed to oversee the plan or any other plan that falls under ERISA in the future.
While this may not be an extremely large amount of money compared to some other ERISA settlements, it shows that the DOL takes this law seriously and is willing to take steps to make plan participants whole when their money has been mismanaged. That’s why it’s important for employees not to hesitate to take action when they believe those responsible for managing the portion of their pay that they’re putting aside for retirement are not living up to their obligations.