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Compliance October 1, 2015
Nearly $1M Left in Abandoned 401(k)
The DOL says a defunct company started plan termination procedures, but failed to complete the termination before ceasing operations.
Reported by Rebecca Moore
The Department of Labor (DOL) has filed a lawsuit to distribute nearly $1 million in assets from the 401(k) plan of a defunct corporation in Wayne, Pennsylvania.
Based on an investigation conducted by the DOL’s Employee Benefits Security Administration (EBSA), the lawsuit alleges that Encorium Group Inc.’s predecessor, the Covalent Group, established a 401(k) Profit Sharing Plan in 1996 to provide a way for its employees to voluntarily save for their retirement years on a tax-free basis. In or around September 2009, the company initiated procedures to terminate the plan, but ceased all business operations before taking additional steps to effectuate the termination of the plan.
The investigation found that since 2009, neither the company nor any former officers of the company have taken fiduciary responsibility for the operation and administration of the plan. As of May 12, 2015, the plan had 33 remaining participants with individual account balances totaling $966,752.08. The plan’s assets are currently held by State Street Bank and Trust.
The complaint seeks to remove the company from its position as a fiduciary with respect to the plan, and to appoint an independent fiduciary to terminate the plan and distribute the remaining assets.
The complaint is available here.