Restore 4 Years of Contributions to SIMPLE IRA Plan, Court Orders
An employer sponsor of a SIMPLE IRA plan must restore to the plan withheld contributions that never made it into the plan’s funds, the U.S. District Court for the District of Connecticut ruled on Sept. 9. American Materials Corp. was the plan’s sponsor and administrator, and its president, Donald J. Bercowetz, was the plan’s sole decision maker.
In its ruling in Perez v. American Materials Corp.
(3:15-cv-01023-MPS), the court gave the company and Bercowetz two years to restore the contributions, just half the number of years it found that the contributions had been used for company purposes and not forwarded to the plan. The contributions amount to nearly $21,000. Further, it forbade Bercowetz from serving as a fiduciary to an ERISA plan in the future.
The ruling comes after an investigation by the Department of Labor’s Employee Benefits Security Administration (EBSA), in which EBSA found that from January 2008 to January 2012, the company and Bercowetz used withheld contribution intended for the plan for their own purposes.
“Fiduciaries’ duties are clear. Their obligation is to the plan and its participants
, not to themselves. Failing to forward withheld contributions to the plan and using those monies for one’s own use are clear violations. The defendants’ actions will now be corrected but they should never have occurred in the first place,” said Susan Hensley, EBSA’s regional director in Boston, in a press release.