DOL Holds 401(k) Plan Fiduciaries Personally Liable for Failure to Timely Deposit Plan Contributions

A recent case should serve to remind that participant contributions to ERISA plans must be deposited into the accounts as soon as they can be reasonably segregated from the employer's general assets--and that the DOL can hold plan fiduciaries personally responsible for failing to do so.  In Micone v. iProcess Online, Inc., the DOL sued an employer (as the plan sponsor and ERISA administrator) and one of its officers for breaching their fiduciary duties by failing to remit participant contributions to the plan and, instead, commingling those contributions with the employer’s general assets.  The employer also failed to ensure that employer matching contributions were deposited and failed to process participants' distribution requests.  Over a seven-year period, employer contributions were withheld but not paid into the plan.  The defendants were ordered to pay the plan over $100,000 within 60 days. The court held them jointly and severally liable, meaning that each can be held responsible for paying the entire amount.  For more information on the contribution rules that apply to 401(k) plans, visit Tax Facts Online. Read More: Link to Q3728.