PITTSBURGH -- The U.S. Department of Labor has initiated legal action against a Coraopolis appliance parts supplier, alleging it violated the Employment Retirement Income Security Act (ERISA) by abandoning its 401(k) plan after closing operations.
On Dec. 13, DOL Secretary of Labor Thomas Perez filed a complaint against Authorized Factory Service Inc. (AFS), charging it with not taking fiduciary responsibility for the operation and administration of its Employee Benefit Plan and its assets, and failing to appoint anyone to assume that responsibility.
Per the complaint, on Jan. 1, 1995, AFS established the plan to “provide benefits to its employees in the event of retirement, death or disability and upon termination of employment.”
AFS ceased operations in 2002 and since that time, it had not taken fiduciary responsibility for the operation and administration of the plan and its assets, nor did AFS appoint anyone to assume those responsibilities.
Under the plan’s terms, its participants are entitled to distribution of the “non-forfeitable portion of their Employer Contribution Account, the account balance of their 401(k) account and the account balance of their after-tax account, if any.”
Plan participants were terminated from the plan in 2002 when the company ceased operations, but have not been able to obtain a distribution from the plan because AFS has not initiated termination of the plan and distribution of the assets. As of June 3, 2015, the plan had five participants and $30,555.70 in assets.
The DOL believes AFS violated ERISA by not “providing benefits to participants and its beneficiaries and defraying reasonable expenses of administering the Plan,” in addition to not doing so with the “care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character with like aims.”
The department is seeking the removal of AFS from its position as a fiduciary with respect to the plan, the appointment of an independent fiduciary to administer the plan in order to effectuate its termination and the distribution of plan assets to the participants and beneficiaries, in addition to any other relief deemed just and appropriate.
The DOL is represented by John A. Nocito and Jordana L. Greenwald of the U.S. Department of Labor’s Office of the Solicitor, in Philadelphia.
The defendant has not secured legal counsel as of yet, according to court records.
U.S. District Court for the Western District of Pennsylvania case 2:16-cv-01836
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com.