DOL Sues SIMPLE IRA Plan Sponsor for Pocketing Retirement Deferrals

A Minnesota HVAC company is alleged by the Department of Labor to have misappropriated the retirement contributions of its’ employees, according to the lawsuit.   

A heating and air conditioning company’s retirement plan fiduciaries were full of hot air, the Department of Labor alleged in a July 6 lawsuit brought against the SIMPLE IRA plan for employees, claiming the company—Dierkes Heating & Air LLC—misappropriated withheld retirement contributions to pay business expenses. 

The DOL, in the name of Acting Secretary of Labor Julie Su, sued Dierkes Heating & Air, the Dierkes Heating & Air SIMPLE IRA Plan and company owner and manager Todd Dierkes in U.S. District Court for the District of Minnesota, alleging the retirement plan fiduciaries improperly retained employee salary deferral contributions in the company’s corporate account—for up to 354 days—and used employee salary deferral contributions to pay the general operating expenses for Dierkes Heating, rather than transfer the retained employee contributions to the plan.

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“As a direct and proximate result of defendants Dierkes Heating and T. Dierkes’ fiduciary breaches, the plan suffered injury and losses for which they are personally liable and subject to appropriate equitable relief,” the complaint states.

Waite Park, Minnesota-based Dierkes Heating and Air provides residential and commercial heating, ventilation and air conditioning services.

The DOL alleged two counts against defendants—for failure to remit employee contributions to the IRA plan and for failure to remit employee contributions in a timely manner—under the Employee Retirement Income Security Act.

“Defendants Dierkes Heating and Dierkes failed to hold all assets of an employee benefit plan in trust … permitted the plan’s assets to inure to the benefit of the employer and failed to hold them for the exclusive purpose of providing benefits to the plan participants and their beneficiaries and defraying reasonable expenses of plan administration in violation of ERISA … [and] failed to act solely in the interest of the participants and beneficiaries of the plan and for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of plan administration,” the complaint alleges.

Requests for comment to Dierkes Heating & Air and Todd Dierkes were not returned.  

Dierkes Heating established the SIMPLE IRA plan on January 1, 2020, to provide retirement benefits to its employees, the complaint states. 

A SIMPLE [Savings Incentive Match Plan for Employees] IRA plan follows the same investment and distribution as traditional IRAs but is regulated under ERISA as an employee benefit plan, according to FAQs posted on the IRS website. The arrangement can provide small businesses with a “simplified method to contribute toward their employees and their own retirement savings,” according to the IRS.

The DOL complaint alleges misappropriation by Dierkes and the company during a time a period of at least January 10, 2020, through July 31, 2022.

Between January 1, 2020, and August 5, 2022, Dierkes Heating withheld a total of $35,352.95 from its employees’ pay as salary deferral contributions intended for the plan. From at least January 1, 2020, through the present, Dierkes had signature authority on Dierkes Heating’s bank accounts, according to the complaint.

The plan’s governing documents said plan participants could make pre-tax salary deferral contributions to the plan through payroll deductions. Employee Benefit Security Administration regulations mandate that plan fiduciaries handling “participant contributions are to be remitted to the plan” not later than the 30th calendar day following the month in which the participant contribution amounts would otherwise have been payable to the participant in cash, the complaint explains.

“From at least July 23, 2021, through at least July 31, 2022, defendant T. Dierkes had authority and control over whether Dierkes Heating remitted withheld employee salary deferral contributions to the Plan, and exercised such authority and control,” the complaint says. “From at least July 23, 2021 through at least July 31, 2022, defendant T. Dierkes caused Dierkes Heating to retain $13,372.95 in employee salary deferral contributions in its corporate bank account and used those assets to pay Dierkes Heating’s general operating expenses, rather than remit such contributions to the plan.”

The DOL alleges on the first count that because of Dierkes Heating and Dierkes’ fiduciary breaches, “the plan suffered injury and losses for which they are personally liable and subject to appropriate equitable relief.” On the second count, the DOL alleges substantially similar claims, that Dierkes Heating is responsible for “Failure to Remit Employee Contributions to the Plan in a Timely Manner.”

“Dierkes Heating failed to remit $21,309.80 from its employees’ pay as salary deferral contributions intended for the Plan in a timely manner and retained those amounts in its bank account for up to 354 days until they were finally remitted to the Plan,” the complaint states.

The DOL is seeking a judgement holding Dierkes and Dierkes Heating & Air LLC liable for violating the fiduciary duty to protect the interests of participants and their beneficiaries in employee benefit plans; permanently barring both Dierkes Heating and Dierkes from serving or acting as fiduciaries or service providers to any ERISA-covered employee benefit plan; and ordering them to restore all plan losses resulting from their breaches.

Retirement Industry People Moves

Segal appoints Tauzer to senior VP; Cerulli promotes O’Brien to director; Newton announces Brain as deputy CIO.

Segal Appoints Tauzer to Senior VP

Todd Tauzer

The Segal Group promoted Todd Tauzer to senior vice president at the San Francisco-based workplace benefits and human resources consultant, a spokesperson confirmed.

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Tauzer is responsible for “partnering with major city, county, and other municipal retirement systems, primarily throughout California and the West, to build and maintain funding policies and system practices to secure benefits over time through sound funding discipline and thoughtful risk management strategies,” Tauzer wrote on LinkedIn.

Tauzer had been Segal’s national public sector retirement practice leader, having joined in 2019 as a vice president and actuary.


Cerulli Associates Promotes O’Brien to Director

Shawn O’Brien

Cerulli Associates promoted Shawn O’Brien to director of retirement data and analytics, reporting to Bing Waldert, managing director of U.S. Research.

O’Brien was previously an associate director of retirement, responsible for leading the retirement practice. He joined Cerulli Associates in 2019 as a senior retirement analyst.


Newton Investment Management Announces Brain as Deputy CIO

Paul Brain

Newton Investment Management, part of BNY Mellon Investment Management, has promoted Paul Brain to deputy chief investment officer.

In the newly created role, Brain will focus on developing Newton’s multi-asset capabilities. Brain’s existing role as head of fixed income will be assumed by Ella Hoxha, who joins from Pictet Asset Management, on July 31.

“Paul has been with the business for over 20 years and has a depth of experience that will provide our multi-asset franchise with a rigorous leader committed to delivering innovative client solutions anchored on investment performance,” Euan Munro, Newton’s CEO, said in a statement.


SS&C Announces Appointment of Schell as CFO

Brian Schell

SS&C Technologies Holdings Inc. announced the appointment of Brian Schell as chief financial officer and executive vice president. He will report to SS&C Chairman and CEO Bill Stone.

Schell joins the firm from Cboe Global Markets, where he was executive vice president, CFO and treasurer. He has more than 30 years of experience at financial institutions, including H&R Block, the FDIC, KPMG and JP Morgan.

“I am pleased to welcome Brian,” Stone said in a statement. “Brian is a seasoned finance leader in the technology and financial services industries and is known for deftly navigating the capital markets.”

Bui Named Head of U.S. Equities, ETPs at Nasdaq

Giang Bui has started a new position as head of U.S. Equities and ETPs at Nasdaq, according to LinkedIn and confirmed by a spokesperson.

Bui previously served as head of U.S. exchange-traded products at Nasdaq. Prior to Nasdaq, she worked at Cboe Global Markets as director of listings and manager of exchange-traded products.

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