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Archived News Release--Caution:
information may be out of date.
For more information call: (202) 219-8921
Almost $5 million in deliquent contributions have now been
restored to the pension plans of 16,800 workers as a result of the U.S. Labor
Department's Pension Payback Program.
The department today announced the paybacks following a six- month
period when it allowed employers as part of its payback program to restore the
401(k) pension funds. Altogether, 170 employers responded, restoring $4.8
million in delinquent contributions ranging from $43 to $200,000.
"We are pleased with the results," said Labor Secretary Robert B. Reich.
"Not only did this voluntary compliance effort recoup money for American
workers, it freed up federal investigators to work on more serious pension
violations."
While discussing the program results, Reich reiterated his belief that
most 401(k) plans are in compliance with Employee Retirement Income Security
Act(ERISA). "Responses came from 38 states and included plan sponsors offering
small plans in rural areas to large plans with millions in annual withholdings
and hundreds of participants," he said.
Notifications were received from various businesses including technology
companies, law firms, physicians, credit unions and industrial plants. Reasons
for the delinquencies varied from computer errors to admitted diversions for
the employer's business expenses.
One employer, for example, returned contributions to its plan plus a 47
percent rate of lost earnings. The plan sponsor elected to return to the amount
one of the plan's highest investment returns earned during the affected time
period.
Eligible employers who participated in the pension payback program could
avoid civil and criminal sanctions, including civil injunctions, criminal
prosecutions or criminal fines, excise taxes and civil money penalties.
They were required to provide the Labor Department with written evidence
that funds actually had been restored and to notify their participants of the
restorations within 90 days. Meanwhile, department investigators are continuing
to examine the notifications to verify that the contributions were, in fact,
made to the plans and that all conditions of the program were met.
Employers who engaged in the most egregious conduct were not allowed to
take advantage of the program. Participation also was not available to persons
who failed to make timely deposits of participant contributions after April 5,
1996, or had unpaid participant contributions exceeding the aggregate amount of
participant contributions received or withheld from employee wages in calendar
year 1995,
The Pension Payback Program is part of the overall enforcement effort
announced by the Secretary on Nov. 28 focusing on the possible mishandling of
participants' contributions to these plans.
Since the beginning of the department's focus on 401(k) contributions,
1,178 investigations have been opened, including 434 that have been closed. So
far, $9.8 million has been returned to these plans. There have been 59 criminal
cases opened, with six cases resulting in guilty pleas.
Archived News Release--Caution:
information may be out of date.
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