Compliance August 2, 2010

Mets Management Beaned by 401(k) Suit

The owner of the New York Mets has been sued for the role he allegedly played in wiping out a participant’s 401(k) account.

 

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According to Reuters, Mets owner Fred Wilpon has been sued by Elyse Goldweber, the wife of late Sterling Equities employee David Sloss, who claims that her 401(k) nest egg has been scrambled as a result of dealings with infamous Ponzi schemer Bernie Madoff.  Sterling owns the Major League Baseball team,  

The suit, filed in the U.S. District Court in Manhattan, is seeking class-action status on behalf of other Sterling employees, hopes to “recover assets that were lost through imprudent investments made on its behalf.” It names Sterling executives Arthur Friedman and Michael Katz as co-defendants, as well as Mets Chief Executive Officer Fred Wilpon. 

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Goldweber claims that her now-deceased husband had accumulated $280,420 in his 401(k) account with Sterling Equities, which owns the Mets, but that the money has since been “wiped out.”  The suit further claims that Sterling Equities sent Goldweber an account statement in March warning her not to rely on the funds being available because of the Madoff entanglements, according to the New York Post.  

At the time Madoff disclosed in December 2008 that his $65 billion investment venture had collapsed, Wilpon said his family and his business weren’t in financial jeopardy, the lawsuit said, according to Reuters.  “Defendant Wilpon’s statement that his family and his business family were all ‘fine’ did not take into account the loss of the retirement savings of many of his employees,” the lawsuit said.  

“Thus, while defendant Wilpon has been quoted as claiming that he and his business family are ‘fine,’ his loyal employees (many of whom had previously been laid off) have lost their retirement savings,” the suit contends, according to Reuters.  In a company filing cited by Goldweber in the suit, roughly 92% of the firm’s retirement plan assets ($16.2 million of the firm’s $17.7 million in retirement plans) was tied up with Madoff.

Madoff, of course, is serving a 150-year prison term for perpetrating the $65-billion Ponzi scheme that devastated thousands of investors.

“We believe the complaint has no merit,” the Great Neck, New York-based company said in a statement. “The Sterling Equities 401(k) Plan and its participants were among the many victims of the Madoff fraud”, noting that it has filed a claim with the Securities Investor Protection Corporation or SIPC, and assisted participants with filing claims.  “We believe the participants who were defrauded by Madoff are entitled to the full protection of SIPC and are therefore eligible to be reimbursed for all their losses as is provided under the law,” the company said in its statement. 

Compliance July 30, 2010

DoL Says no Extension to Form 5500 Deadline

The Department of Labor has decided not to grant a blanket extension for filers of Form 5500 and Form 5500-SF.
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A SunGard Relius news release said that in a letter to the American Benefits Council dated July 21, 2010, the DoL stated it has concluded that a blanket extension for all filers is neither necessary nor appropriate. Therefore, the normal July 31, 2010, due date will apply for a calendar year plan to the 2009 plan year filing, unless the employer extends the due date.   

The DoL stated that while it recognizes that some plans may need additional time to file, it believes the current processes for obtaining an extension are adequate to address those needs.  

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An employer can obtain a 2½ month extension to file a Form 5500 or Form 5500-SF by filing Form 5558 with the IRS on or before the normal due date for the return. According to the news release, the DoL does not believe that requiring the filing of the Form 5558 imposes a significant burden on an employer requesting the extension, but states a blanket extension would require system changes that would be both complicated and costly.  

In a letter to Phyllis C. Borzi, Assistant Secretary, Employee Benefits Security Administration Jan Jacobson, Senior Counsel, Retirement Policy of The American Benefits Council, contended that the deadline should be moved off to the later of December 31, 2010 or 9 ½ months after the end of the plan year (see Trade Group Urges Form 5500 Deadline Delay).    

Jacobson pointed out that: 

  • many employers will be filing a new form, the Form 5500-SF; 
  • others, particularly employers that maintain section 403(b) plans, will effectively be filing the Form 5500 for the first time; 
  • there has been confusion over the elimination of the Form SSA as a schedule to the Form 5500, and its transition to a filing requirement with the Service through the new Form 8955-SSA (which has not yet been released); and 
  • the 2009 Form 5500 (other than the Form 5500-EZ) must for the first time be filed electronically using either EFAST2’s Web-based filing system or an EFAST2-approved vendor. Some of the EFAST2-approved vendors have only very recently developed their systems and made the necessary software available.  

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