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Release Date: September 19, 2007
Release Number: 07-1423-CHI
Contact Name: Brad Mitchell
Phone Number: 312.353.6976
Wixom, Michigan – The U.S. Department of
Labor has reached agreement with William G. Kennedy, former vice
president of Kennedy Boring and Machine Inc. in Wixom, to pay $23,206.05
to the company’s 401(k) plan and removing him as a fiduciary to the
plan, resolving a lawsuit filed by the department.
In a consent judgment filed in federal district court
in Detroit, Kennedy agreed to pay the funds after having failed to
forward employee contributions and loan repayments to the company’s
401(k) plan during a period of more than two years. Failing to forward
such contributions and repayments in a timely manner is a violation of
the Employee Retirement Income Security Act (ERISA). Kennedy also has
agreed to forfeit his own 401(k) funds to offset any lost opportunity
costs due the participants in the plan.
“The department will act when plan fiduciaries fail
to carry out their duty to protect the retirement plan assets held on
behalf of participants,” said Joseph Menez, director of the Labor
Department’s Employee Benefits Security Administration (EBSA) regional
office in Cincinnati.
The company ceased operation in December 2002 and was
dissolved by the state of Michigan in 2006. Assets held in individual
401(k) plan accounts were never distributed to the rightful owners.
The consent judgment also allows the court to appoint
an independent fiduciary who will liquidate the plan and distribute
assets as appropriate.
Employers with similar problems who are not yet
subjects of EBSA investigations may be eligible to participate in the
department’s Voluntary Fiduciary Correction Program (VFCP).
Participation requires employers to make workers whole but allows them
to avoid EBSA enforcement actions and civil penalties as well as any
applicable excise taxes. For more information about the VFCP, see
www.dol.gov/ebsa.
This suit resulted from an investigation conducted by
EBSA’s Cincinnati Regional Office. Employers and workers can reach the
office at 859.578.4680 or toll-free at 1.866.444.EBSA (3272) for help
with problems relating to private sector retirement and health plans. In
fiscal year 2006, EBSA achieved monetary results of $1.4 billion related
to pension, 401(k), health and other benefits for millions of American
workers and their families.
Chao v. Kennedy
Civil Action Number 2:07cv10772
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