A steep penalty for shoddy 401(k) handling

by Jake Simms

Posted in: Compliance/Legislation, In this week's e-newletter, Latest News & Views

Companies that take liberties with employees’ retirement plans eventually get caught. The latest example:

The CEO and CFO of USA Star Healthcare Group didn’t remit $400,000-plus in contributions and loan payments that were withheld from employees’ paychecks.

Instead the two execs held onto the funds and put them in other hospital accounts. They also didn’t forward workers’ contributions into the plan in a timely manner, with deposits being made nearly a year late.

The Department of Labor investigated the execs for violating the Employee Retirement Income Security Act (ERISA). Both execs must repay $600,692 plus interest into the retirement plan.

Plus: They will also pay a 20% penalty and are banned from serving as service providers or fiduciaries for any ERISA-covered retirement plan in the future.

Cite: Solis v. USA Star Healthcare Group-East Los Angeles, Inc., Civil Action No. SACV11-00307.

Tags: 401k, Employee Retirment Income Security Act, ERISA, financial fraud, usa star healthcare group

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