Fiduciaries Ordered to Restore Withheld 401(k) Contributions

A construction company ceased operations in 2013 and has not paid 401(k) participants their plan assets, according to a lawsuit.

The Department of Labor (DOL) announced that plan fiduciaries, including the owner of the plan sponsor company, have been ordered by a district court to restore employee contributions withheld but never forwarded to the plan.

In August, the DOL’s Employee Benefit Security Administration (EBSA) filed a lawsuit against Oxford Holdings, a former construction company, and its president and 401(k) plan trustee, Steven J. Watkins, alleging that plan contributions withheld from employee paychecks were kept by the company.

Aetna Construction was also a participating employer in the plan. The lawsuit alleges that during the period from April 12, 2010, and April 5, 2013, contributions in the amounts of $139,144 and $117,167 were withheld from employee paychecks by each employer and not segregated from general company assets. The DOL says the plan assets were used for company purposes and obligations.

Oxford Holdings and Aetna Construction ceased operations in April 2013. The lawsuit says Watkins and the companies failed to terminate the plan and distribute assets to participants.

A consent judgment and order was entered in the U.S. District Court for the Southern District of Florida on October 19 which permanently enjoined the defendants from violating provisions of the Employee Retirement Income Security Act (ERISA) and from acting as fiduciaries, trustees, agents, or representatives in any capacity to any employee benefit plan, as defined by ERISA. Additionally, the defendants are ordered to make restitution to the plan, including interest or lost opportunity costs that occurred as a result of their breaches of fiduciary obligations through September 30. Post-judgment interest will continue to accrue until paid in full.

The defendants are also ordered to appoint AMI Benefit Plan Administrators Inc. as independent fiduciary to the plan in order to collect, marshal and administer the plan. The defendants will reimburse the plan for AMI’s reasonable fees and expenses with respect to services performed for the plan.