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Compliance August 16, 2023
DOL Sues 401(k) Plan, Fiduciary for Abandoning Plan
The Department of Labor claims a payroll services and HR outsourcing company has effectively barred participants from accessing accounts and refused to accept contributions to the plans.
Reported by Noah Zuss
Retirement plan participants accumulated total assets of $1,706,503 in 34 accounts of the Professional Payroll Concepts Inc.’s DBA Personnel Management of WV 401(k) Plan, yet cannot access any of it, the Department of Labor claims in a lawsuit filed in West Virginia federal court on Wednesday.
The DOL sued Professional Payroll Concepts Inc., company president and administrator Krista Chitwood—the purported plan sponsor of a multiple employer plan—alleging the plan was abandoned by fiduciary Chitwood, locking out participants from accessing accounts or making contributions to the plans.
The DOL alleged that Chitwood terminated the third-party administrators’ access to the plan by barring contributions from employees and failing to obtain a fidelity bond, as required by ERISA, according to the complaint.
The defendants were targeted with three claims of fiduciary breach under the Employee Retirement Income Security Act. The case, Julie A Su v. Professional Payroll Concepts Inc DBA Personnel Management of WV 401(k) Plan and Krista Chitwood, was filed in the U.S. District Court for the Southern District of West Virginia.
In addition to the breaches, the company in 2020 transferred its business assets to an unnamed successor, the DOL wrote.
Professional Payroll Concepts has ceased operations. The company, incorporated in November 2011 in Florida and primarily operated in West Virginia, was an administrative service organization and payroll service provider, the DOL wrote.
Representatives for Professional Payroll Services did not respond to a request for comment by email and a phone number for the company was no longer in service.
The DOL did not return a request for comment.
The DOL sued a shuttered time-share-properties business, alleging plan fiduciaries abandoned the profit-sharing plan, earlier this month.
That lawsuit was the fifth separate enforcement lawsuit brought against retirement profit-sharing plans in 2023 by the DOL. Three of the previous lawsuits made substantially similar allegations that the plan sponsor abandoned responsibility for the plan by preventing access to employees’ retirement savings.