Complaint alleges company abandoned retirement plan
Employees who have worked for a company for a long time depend on their retirement and disability benefits to get them through the years after they stop working. However, all businesses have their risks, and many businesses do not survive. What happens to these benefits when a company goes out of business?
Recently, the U.S. Department of Labor filed a complaint against an appliance parts supply company, claiming that it had abandoned its employee 401(k) plan after it ceased operations. According to the complaint, Authorized Factory Service Inc. established the 401(k) plan as part of its retirement benefits package in 1995. However, when the company went out of business in 2002, it did nothing to administer the plan and its assets. The Department of Labor says the company didn’t even appoint anyone to oversee the plan’s funds, despite having a duty to do so.
Reportedly, there are currently five participants in the plan and more than $30,000 in assets. The complaint alleges that the company violated the Employment Retirement Security Act by not fulfilling its duty to its former employees. The Labor Department seeks the institution of an independent agent to oversee the plan.
The Employee Retirement Security Act, or ERISA, regulates the ways employers administer their employee retirement and disability insurance benefits. When employers offer these benefits, they have a fiduciary responsibility to employees who are enrolled in the programs. This means that they are legally responsible for protecting the assets in the plan and distributing them to beneficiaries.
The issues in ERISA disputes are complex, and it can be difficult for employees to protect their benefits without outside help. It can be extremely important to have the help of lawyers who are experienced in ERISA issues.
Source: Penn Record, “U.S. Department of Labor believes former appliance parts supplier abandoned employee 401(k) plan,” Nicholas Malfitano, Dec. 29, 2016