Advisory Opinion 1975-90

Gentlemen:

The Office of Employee Benefits Security administers and enforces provisions of Title I of the Employee Retirement Income Security Act of 1974 (ERISA). Included within this Title are the fiduciary responsibility provisions, which are set forth in Part 4.

It has come to the attention of this Office that since January 31, 1975, monthly payments in the amount of $2,100 have been made under your authorization to former administrative manager                                                           . These payments were made during a period in which [he] was not permitted to be employed in any capacity by the Funds. We are concerned that this disbursement may be in violation of section 404(a)(1) of ERISA, which provides in pertinent part that the assets of a plan shall be held exclusively for the purpose of providing benefits to participants in the plan and their beneficiaries and defraying reasonable expenses of administering the plan.

For a plan to make payments to an individual who is not currently rendering services, for or on account of services earlier rendered, which services were compensated at the time they were rendered and as to which there is no obligation to make further payment, is not, in our view, permitted by the statute.

Under the provisions of ERISA section 409(a), a fiduciary is personally liable to make good to the plan any losses resulting from a breach of fiduciary responsibility. Accordingly, it would, in our view, be appropriate for you to take prompt steps to assure the repayment to the Funds of the total amount disbursed to Mr.                                                                          during the period from January 1, 1975 to the present, with interest.

Please advise me within twenty days of the steps you have taken or propose to take with respect to the foregoing matter.

I look forward to your reply.