Compliance June 21, 2017

Sponsor Admits Embezzlement of Plan Dollars

The plan sponsor was criminally prosecuted and pled guilty to embezzlement in June 2016; she was ordered by EBSA to make restitution to restore losses to the plan.

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The Department of Labor’s Employee Benefits Security Administration (EBSA) has secured a judgement and consent order against Andrea Lynn McCarthy and Lisa Hall, and the Truss Systems LLC Profit Sharing Plan, for violations of the Employee Retirement Income Security Act (ERISA).

By way of background, the U.S. Secretary of Labor last year filed a complaint, based on an EBSA investigation, alleging that McCarthy improperly withdrew $111,624 from the profit sharing plan between January 28 and June 6, 2009. McCarthy was subsequently criminally prosecuted, and pled guilty to embezzlement in June 2016. She was ordered to make restitution to restore losses to the plan.

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The formal resolution secured by EBSA orders the defendants to pay, on or before July 21, 2017, $25,253 and pre-judgment interest to reflect the lost earnings and post judgment interest for which McCarthy and Hall are jointly and severally liable. Truss Systems, McCarthy and Hall are also permanently enjoined from acting as a fiduciary, trustee, agent or representative in any capacity to any employee benefit plan as defined by ERISA.

Additionally, the court has appointed an independent fiduciary, AMI Benefit Plan Administrators Inc., to terminate the plan, collect and administer the plan’s assets (including the restitution from the criminal case) and make distributions to the affected participants.

The full consent order is available here. 

Compliance June 21, 2017

Bipartisan Bill Seeks Middle-Ground Retirement Solutions

Sponsors of the bill, including both Democrats and Republicans, say it will benefit low- and middle-income workers hoping to augment their long-term retirement savings.
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For small-business employees yearning to grow retirement savings, the Retirement Security Act may just be the solution needed to carry them towards a sustainable future, according to its sponsors.      

U.S. Senator and the Chairman of the Senate Aging Committee Susan Collins (R-Maine), along with Senator Bill Nelson (D-Florida), recently introduced the legislation. They say it is aimed at encouraging small businesses to offer retirement plans to more workers, while also establishing a positive savings mindset among employees. 

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According to Collins, at a high level the legislation would “improve the financial security of many Americans by reducing the cost and complexity of retirement plans.” It would direct the Treasury Department to clarify complicated notices, clarify costs, and reduce tax burdens on low- and middle-income retirement plan contributors by implementing a new “saver’s credit” on Form 1040 EZ.

The senators cite data from the Center for Retirement Research, which found American households face a $7.7 trillion gap between savings needed to meet a preferred standard of living, versus the amount workers are actually putting away. Additionally, just 54% of working Americans are certain their savings will last long into retirement, according to a recent Gallup poll.

To combat poor retirement planning, the Retirement Security Act would allow businesses to share the burden of plan administrative without demanding a connection between both entities. This enables businesses to link with multiple employer plans (MEPs) and provide enhanced retirement programs. MEP members, according to the bill, are secured from risking tax benefits in case an employer in an MEP fails to meet the minimum criteria plans need to retain these benefits.

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