Compliance February 3, 2009

Judge Holds Employer Liable for Missing Plan Contributions

A federal judge has ruled that the owner of a now-defunct Michigan construction firm is personally liable for $24,900 in unpaid retirement savings contributions for the four years before the company folded.
Reported by

U.S. District Judge Patrick J. Duggan of the U.S. District Court for the Eastern District of Michigan made the ruling in a participant lawsuit against LDS Contractors Inc., owned by Frank Donagrandi, who agreed to contribute 10% of plaintiff Paul Safran’s salary to a defined contribution plan.

Duggan ruled in Safran’s favor, after finding that Donagrandi misled participants into thinking LDS was making its required annual contributions despite his responsibilities as a plan fiduciary.

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By not giving Safran complete and accurate information about his plan account when Safran inquired, Donagrandi breached his Employee Retirement Income Security Act (ERISA) fiduciary duties and was, therefore, liable for the unpaid contributions.

According to the opinion, LDS’s business began to decline and no contributions were made to the plan between 2002 and 2006. The court noted that Donagrandi used funds from the plan in his own individual account to pay LDS debts, and that the unpaid contributions were listed as unfunded liabilities on LDS’s books. LDS went out of business in 2006 and the plan was liquidated.

In addition to finding Donagrandi liable to the missing plan contributions from 2002 to 2006, Duggan granted Safran’s request for attorneys’ fees, finding that Donagrandi acted in bad faith.

The case is Safran v. Donagrandi, E.D. Mich., No. 08-12366.

Products February 3, 2009

vWise Launches Participant Adviser Web Site

vWise Inc. has announced the launch of its new SmartPlan Advisor system.
Reported by

The company said the site is designed to help employees better understand their employer’s 401(k) plan, and “provides the benefits of a personal financial professional, in a Web site available 24/7/365.”

Video hosts offer participants a brief video overview of 401(k) basics, followed by a discussion of selected features—such as automatic enrollment, matching contributions, loans, etc.—customized by plan sponsors. Then, using simple interactive forms, the video hosts guide participants through a short process, including individual retirement needs assessments and risk profile surveys, and selection of investment types and contribution amounts. It then generates a personalized investor profile, according to a press release.

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vWise said combining a video-based presentation with an interactive application that prompts users to make informed investment decisions can help increase plan enrollment, raise participant contribution levels, and reduce support costs.

The SmartPlan Advisor system also includes an administration portal that provides a suite of tools in a menu-driven format, as well as pre-designed email templates and custom-tailored analytics reports, which helps sponsors manage plans more easily, the company said.

More information is available at www.vwise.com.

 

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