Compliance March 3, 2020

Former Pension Fund Trustee to Pay $462K for Embezzlement

The trustee embezzled approximately $186,123.93 from the plan, as well as knowingly and willingly failed to file a required annual report for the CMG pension plan.

Reported by

The U.S. District Court for the District of New Jersey has sentenced a former pension plan trustee to 30 months in prison, followed by three years of supervised release and ordered him to pay $462,049 in restitution for embezzling funds from the plan sponsored by CMG Vending Inc. in Union City, New Jersey. The court also fined him $10,000.

The court sentenced the former trustee after he pleaded guilty in June 2019 to one count of theft, embezzlement and conversion to his own use or the use of another money and funds of an employee pension benefits plan.

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Investigators from the New York Regional Office of the U.S. Department of Labor’s (DOL)’s Employee Benefits Security Administration (EBSA) and the Office of Inspector General (OIG) found that from on or about September 2013, to April 2018, the man served as a plan trustee for CMG Vending Inc. Pension Trust Fund. During this time, he embezzled approximately $186,123.93 from the employee pension benefit plan.

Additionally, from on or about January to July 2016, he knowingly and willingly failed to file the required annual report for the CMG pension plan.

Both acts violated the Employee Retirement Income Security Act (ERISA).

Ask the Experts March 3, 2020

Who Is Immediately Vested Upon Plan Termination?

Experts from Groom Law Group and Cammack Retirement Group answer questions concerning retirement plan administration and regulations.

Reported by

“I work with a 403(b) plan sponsor that will be terminating its plan. Can you confirm that affected participants—those who would be immediately vested—only includes non-vested participants that have not taken their full account value and have not had a 5-year break-in-service? In other words, if a non-vested participant took a distribution one year before the plan termination, that person would not be affected?”

Stacey Bradford, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:

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Correct, non-vested employees who took distributions prior to the plan termination date would not be affected. Per the IRS webpage on 401(k) plan terminations (the rules are the same for 403(b) plans with regard to this particular issue):

“100% vesting

All affected participants become fully vested in their account balances on the date of the full or partial plan termination, regardless of the plan’s vesting schedule.

  • Elective deferrals are always 100% vested.
  • Full vesting in a plan termination applies to employer nonelective contributions (such as profit-sharing contributions) and to matching contributions.

Full termination – Affected participants are current or former employees who haven’t received full payment of their vested interest by the plan termination date, unless they’ve incurred at least 5 consecutive 1-year breaks in service.”

Thus, if the participant in question took a full distribution of his vested amount one-year prior to the plan termination date, that person would not need to be fully vested in amounts that were not vested as of the date of that prior distribution because it occurred prior to the plan termination date.

Note that this response only addresses vesting upon plan termination; see our prior Ask the Experts column on this issue of whether such full and immediate vesting can occur on the date there is a complete discontinuance of contributions to a 403(b) plan.

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Rebecca.Moore@issgovernance.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future Ask the Experts column.

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