Compliance June 12, 2009

Judge Throws Out Unpaid Contribution Provision in Plan Document

A federal judge in Massachusetts has ordered the sponsor of a master plan to strike a clause in its plan documents relieving the trustee of the duty to collect unpaid employer plan contributions.
Reported by

U.S. District Judge Douglas P. Woodlock of the U.S. District Court for the District of Massachusetts ruled that Employee Retirement Income Security Act (ERISA) Section 403 imposed the duty on a trustee to monitor and pursue unpaid employer contributions. A plan provision going against that obligation would be contrary to public policy and shouldn’t be allowed to stand, Woodlock asserted.

The ruling came in a U.S. Department of Labor suit against Plan Benefit Services, Inc., regarding the master plan servicing more than 1,000 individual workplace retirement plans. Under the master plan and trust, each employer adopted an individual retirement plan for its employees and deposited the required contributions in the master trust. The master plan sponsor was responsible for the master plan’s language; for amending the plan and trust documents; and for appointing and removing the trustee.

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Woodlock said he performed a property rights analysis and concluded that ordinary notions of property rights include the right to collect unpaid contributions. The item doing away with the mandate to pursue unpaid contributions violated Section 410 of ERISA that voids such provisions if they are found to violate public policy.

The court ordered the section be removed from the plan documents.

The ruling is available here.

Deals & People June 12, 2009

Psychiatric Care Facility Taps MassMutual as Bundled 403(b)/DB Provider

MassMutual's Retirement Services Division has been selected by The Austen Riggs Center, based in Stockbridge, Massachusetts, as the new full-service provider for the company's $7 million defined benefit plan, as well as its $5 million 403(b) plan.
Reported by

“This consolidation provides a tremendous opportunity for Austen Riggs to tap MassMutual’s nonprofit expertise while gaining efficiencies with a single provider for both our defined contribution and defined benefit plans,” said Chauncey Collins, director of operations, Austen Riggs, in a press release. Collins praised MassMutual’s employee communications platform and educational materials

The Austen Riggs Center is a not-for-profit, open psychiatric continuum of care facility specializing in the psychotherapeutic treatment of psychiatric disorders and has offered long-term residential and hospital-level psychiatric treatment for 85 years.

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