The U.S. Labor Department has filed a lawsuit against a now-defunct St. George company and its former president, alleging that the company failed to deposit or was late in depositing employees' 401(k) contributions.
The lawsuit, filed in U.S. District Court for Utah, alleges that Kory Thurston violated the federal Employee Retirement Income Security Act when he failed to remit $14,612 in employee contributions to the 401(k) plan at Marketing Solutions International Inc. from Jan. 25, 2003, through Oct. 25, 2003.
At the time of the allegedly improper transactions, the department said MSI was the retirement plan's administrator and that Thurston failed to terminate the plan and properly distribute its assets to participants when the company failed.
"This was a company that was in business and then ran into financial difficulties and closed its doors and walked away from its responsibilities," a department spokesman, who declined to be identified, told the Deseret Morning News. "Among those responsibilities were its duties as fiduciary of its 401(k) plan."
Thurston could not be reached for comment. According to a statement released by the Labor Department, MSI was a telemarketing company that marketed educational materials and services for home-based businesses. The company folded on or about Oct. 1, 2002, the department said, at which time the plan covered 29 participants and held about $26,068 in assets.
The lawsuit seeks to require the company to restore all contributions and lost earnings to the plan, and to remove Thurston as a fiduciary, permanently bar him from serving any employee benefit plan covered by ERISA and appoint an independent fiduciary to terminate the plan and distribute the assets to eligible participants and beneficiaries.
"There is a plan, it does have funds, and there are participants who need assistance to marshal all the assets and take proactive action to terminate this plan legally," the Labor Department spokesman said. "We need to get these participants either paid back the amounts in their accounts, or, if the participants wish, have the money rolled over to another account."
The Thurston case is part of the Labor Department's efforts to address "orphan plans," which most often result when there is no one at an organization with authority to operate the plan due to death of the individuals designated as fiduciaries, neglect by companies to appoint successor fiduciaries, or corporate mergers or bankruptcies.
In fiscal 2004, the department's Employee Benefits Security Administration reported that it saw monetary results of $3.1 billion related to pension, 401(k), health and other benefits plans.
"People need to know they can take very proactive steps if they work for an employer and they start sensing that there is some sort of financial difficulty going on," the department spokesman said. "They need to know they have rights under ERISA, too."
More information about "orphaned" retirement accounts is available at www.dol.gov/ebsa.
E-mail: jnii@desnews.com