In both cases, an investigation by the EBSA found plans had not been terminated when the companies’ ceased operations.
Custom Patio Rooms Inc., a Pittsburgh, Pennsylvania-based company, had established a profit-sharing 401(k) plan for certain employees and a union employee 401(k) plan for other employees. The plans were not terminated nor the assets distributed to all of the participants and beneficiaries when the company ceased operations in 2009. As of July 2013, the profit-sharing plan had 22 participants and $155,745 in assets, and the union plan had eight participants and $12,875 in assets.
GEI International Inc., a Wayne, Pennsylvania-based company, established a 401(k) plan for its employees, and although the company ceased operations in 2003, the plan had not been terminated nor its assets distributed to participants and beneficiaries. As of February 2012, the plan had 16 participants and $146,209.32 in assets.
The DOL filed complaints in federal court against the companies, seeking removal of the companies as fiduciaries and the appointment of an independent fiduciary to terminate the plans and distribute assets to participants and beneficiaries. Both companies failed to defend the complaints.
For Custom Patio Rooms, the U.S. District Court for the Western District of Pennsylvania granted a default judgment on August 5, appointing Metro Benefits Inc. as an independent fiduciary. For GEI International the United States District Court for the Eastern District of Pennsylvania granted a default judgment on August 2, appointing Lefoldt & Co., P.A., as the plan’s independent fiduciary.