Federal court orders Louisville technology services provider, retirement savings plan to repay $575K to plan participants
Date of action: September 28, 2023
Type of action: Employee Retirement Income Security Act consent order and judgment
Names of defendants: Sypris Solutions Inc. and
Sypris Solutions 401(k) Merged Retirement Savings Plan
Background: On December 27, 2017, the U.S. Department of Labor filed a complaint in the U.S. District Court, Western District of Kentucky, Louisville Division, alleging that Sypris Solutions Inc. – a Louisville, Kentucky, technology services provider – and members of its retirement savings plan advisory committee failed to follow its own governing documents regarding the use of forfeiture funds for several of its 401(k) plans.
The department alleged that from 2012 through 2015, the 401(k) plans’ governing documents required defendants to use forfeiture funds to pay plan expenses, but instead, defendants used the forfeiture funds to reduce employer contributions to the plans. By doing so, the employer benefited by reducing its contributions to the plans, at the expense of plan participants who saw their plan account balances reduced by payments of plan expenses from plan assets and not from forfeitures.
Resolution: On Sept. 28, 2023, Judge Benjamin Beaton issued a consent order and judgment ordering Sypris Solutions Inc. to restore $575,000 to the plan participants who were harmed by defendants’ use of the forfeiture funds. The company and the plan have agreed to attempt to locate harmed participants who participated in the plans between 2012 through 2015 who are no longer in the plan and owed $250 or more, and pay $57,500 in penalties to the department.
Docket Number: 3:17-cv-784-BJB