Compliance September 15, 2009

DoL Moves to Force 401(k) Restitution

The U.S. Department of Labor (DoL) has gone back to federal court asking a judge to force a former health-care firm owner to restore millions of dollars he embezzled from his company’s 401(k).

Reported by

A DoL news release announcing the suit filed in federal court in Florida against Floyd Seibert said government lawyers are asking a judge to force Seibert to restore opportunity costs lost to the 401(k) plan at Central Home Care Services, Inc., and for the court to order money withdrawn from Seibert’s personal plan account as part of the assets to be returned. 

The DoL suit charged Seibert with engaging in prohibited transactions under the Employee Retirement Income Security Act (ERISA).

In a related criminal case, Seibert pleaded guilty and was sentenced to federal prison in 2007 for embezzling from the 401(k) plan and for Medicare fraud. At the time of sentencing, U.S. District Court Judge James E. Gritzner ordered Seibert to pay $5.7 million in restitution.

In the criminal case, authorities alleged that between April 1999 and October 2001, Seibert transferred funds from the retirement and medical plans of Central Home Care Services, Inc. to Health Care International Holdings in exchange for bonds (see “FL Business Owner Siphons Nearly $4M from Benefit Plans”). However, Health Care International Holdings was a shell company with only $1,000 in assets.

Data & Research September 15, 2009

‘Active’ Sponsorship Contributes to Success of 403(b)s

A new report from The Principal suggests that actively sponsored non-profit plans, including 403(b) plans, are achieving the same level of success as their for-profit counterparts.

Reported by

“The Total View 2009” said that among non-profit organizations that sponsor retirement plans with services provided by The Principal, participation and deferral rates held steady from 2007 (64.6%) to 2008 (64.9%) and the participation rate is comparable to the overall participation rate among for-profit and non-profit organizations at 66.1%.

In addition, in 2008, non-profit plans using The Principal’s program of one-on-one education at the worksite saw participants’ overall contribution level increase to the same level as for all DC plan participants (7.3%). The 7.3% rate in plans using the education program compared to an overall contribution level of 6.4% for those plans not using the education program.

The report is based on calendar-year 2007 and 2008 data from plans with services provided by The Principal, which includes 2008 data based on 2,358 non-profit plans and 2007 data based on 2,248 non-profit plans.

The report is available at www.principal.com/totalview.

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