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Compliance August 13, 2018
DOL Appoints Independent Fiduciary to Abandoned Plan
Fiduciaries of the Sacred Heart Hospital Profit-Sharing 401(k) Plan failed to administer the plan after the hospital operations ceased in 2013, according to the DOL.
Reported by Rebecca Moore
The Department of Labor (DOL) has entered into an agreement with the fiduciaries of the Sacred Heart Hospital Profit-Sharing 401(k) Plan to appoint an independent fiduciary to manage and distribute assets of the Chicago-based retirement plan to its nine participants.
The agreement is part of a consent judgment filed and approved by a federal judge. An investigation by the DOL’s Employee Benefits Security Administration (EBSA) found that the fiduciaries—former chief financial officer Roy M. Payawal and former president Edward J. Novak—violated the Employee Retirement Income Security Act (ERISA) by failing to administer the plan after hospital operations ceased in 2013.
Under terms of the consent judgment, the court appointed Lefoldt & Co. to be the plan’s independent fiduciary and ordered Payawal and Novak to fund $8,906 in an escrow account to cover Lefoldt’s cost. The fiduciary will issue distributions to the remaining participants and terminate the plan that, as of February 2017, had approximately $93,446 in assets.
The judgement also permanently enjoins Payawal and Novak from serving as a fiduciary to any employee benefit plan in the future.
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