Compliance November 18, 2013

Case Shows Importance of Keeping Documents

A federal district court in northern Indiana ruled a retirement plan sponsor must pay nearly $4,500 in penalties for failing to provide historical, plan-related documents.
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In Hartman v. Dana Holding Corp (case 1:12-cv-00445-RBC), the U.S. District Court for the Northern District of Indiana levied $4,470 in penalties against Dana Holding after the company failed to provide a deceased participant’s widowed spouse with retirement plan documents that took effect in 1979. Elaine Hartman filed the suit in 2011 following the death of her husband, who had worked 24 years for Dana Holding or companies that the manufacturing firm has acquired, case documents show.

After her husband’s death, Hartman contacted Dana to inquire about a survivor annuity and was told her husband had elected against such an annuity in 1979. Hartman then requested the relevant plan documents and summary plan description, together with her husband’s election form and the spousal waiver form.

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Months later, and after a series of additional communications with Dana staff who indicated they could not find the 1979 documentation, Hartman sued Dana and the Weatherhead-UAW Combined Hourly Employee Pension Plan seeking statutory penalties against Dana for its failure to provide the documents, along with some attorney’s fees. The case further alleged that Dana breached its fiduciary duty to Hartman under 29 U.S.C. §§ 1132(a)(2) and 1109, and failed to establish and maintain a reasonable claims procedure as required by 29 U.S.C. § 1133.

While the court approved Hartman’s statutory damage claims, it ruled the plan-wide injunctive relief sought by Hartman is excessive.

The full text of the court’s decision can be found here.
Compliance November 18, 2013

Court OKs Asset Restoration for Mass. Plan

The Department of Labor (DOL) won judgment from a federal district court to have funds restored to a retirement plan based in Ayer, Massachusetts.
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In the case of Perez v. Goldsmith et al. (Docket Number: 1:13-cv-12761), the U.S. District Court for the District of Massachusetts entered a consent judgment and order after defendants agreed to pay out a total of $90,288.91 to plan participants, including lost opportunity costs. The defendants listed in the lawsuit, filed by the DOL, are Goldsmith, Prest & Ringwall Inc., Calvin R. Goldsmith and Bruce D. Ringwall.

The DOL lawsuit put forth that the defendants sponsored the Goldsmith, Prest & Ringwall Inc. SIMPLE IRA [Individual Retirement Account] Plan to provide retirement benefits for employees and their beneficiaries. In addition, Goldsmith and Ringwall were named as the plan’s fiduciaries, responsible for receiving and collecting all monies due to the plan, properly managing plan assets and collecting employer contributions due to the plan.

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An investigation by the DOL’s Employee Benefits Security Administration (EBSA) found that, from 2009 to the present, the defendants failed to remit any and all withheld employee contributions to the plan. This resulted in unremitted contributions totaling $71,855 plus lost opportunity costs. From 2008 to the present, the defendants failed to take appropriate measures to collect any and all employer contributions due to the plan resulting in uncollected employer contributions totaling $26,628 plus lost opportunity costs.

The judgment also requires the defendants to represent that all payments due to the plan are current and up to date, to refrain from future violations of the Employee Retirement Income Security Act (ERISA), to provide plan participants with a copy of the consent judgment and provide proof of payment and to provide a full accounting of the proceeds to the DOL.

The full text of the consent judgment and order can be found here.

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