Compliance

DOL Says 401(k) Trustee Failed to Perform Duties

By Kevin McGuinness editors@plansponsor.com | March 28, 2014

March 28, 2014 (PLANSPONSOR.com) – The Department of Labor (DOL) has filed a lawsuit to remove and replace a 401(k) plan trustee for failing to perform his duties.

The DOL suit, Perez v. Edward J. Sajovic and the Edward J. Sajovic Design LLC 401(k) Profit Sharing Plan (docket number: 1:14-cv-01922), filed in the U.S. District Court for the Eastern District of New York, says the 401(k) plan was established in January 2011 to provide retirement benefits for employees of Edward J. Sajovic Design LLC in the borough of Queens in New York. Edward Sajovic and John Cuozzo were the plan trustees. John Hancock Financial Services has been the custodian of the plan’s assets.

The DOL’s Employee Benefits Security Administration (EBSA) found in April 2013, Sajovic sought and obtained Cuozzo’s removal as a plan trustee, leaving Sajovic as the sole plan trustee. In May 2013, Cuozzo requested that John Hancock roll over his eligible plan benefits to his individual retirement account. To date, Sajovic has not authorized the rollover for Cuozzo and for two other former employees who made the same request.

Sajovic’s failure to administer the plan on behalf of anyone but himself means that Cuozzo and the plan’s other participants cannot obtain their plan assets, the DOL says. Currently, the plan holds $118,678.82 in assets for seven participants.

The EBSA investigation also found Sajovic failed to provide the plan’s third party administrator with the information necessary to calculate the employer matching funds due to each participant in 2012, failed to file a Form 5500 with the Internal Revenue Service for 2012 and took $30,000 in loans from his eligible plan benefits in 2013.

Due to Sajovic’s failure to perform his fiduciary duties, the DOL lawsuit asks the court to remove him as plan trustee, bar him from serving as a fiduciary to this and any other plan covered by the Employee Retirement Income Security Act (ERISA), and order further relief where appropriate.

More information about the DOL suit can be downloaded here.