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Paychex, Inc. has moved to federal court from state court a fiduciary breach complaint filed in February against it by a participant in an ERISA retirement plan for which Paychex was the recordkeeper.
Paychex has not responded to the substance of the original complaint but argues that it belongs in a federal court because the court is the correct authority for a case under the Employee Retirement Income Security Act, a federal law.
In the Feb. 29 complaint, filed in state court in New York, retirement account holder Dylan Handy, claims fiduciary breach violations by a Paychex, which was third-party recordkeeper to the retirement plan offered by Handy’s former employer, Elm Street Technology LLC. Handy alleged a rollover distribution of his entire $116,125.45 401(k) account balance was intercepted in the mail on the way to his rollover account provider, then altered and the assets deposited into someone else’s account.
Handy’s state complaint, filed in the state Supreme Court for Monroe County, New York, states he directed Paychex to send him a rollover distribution from his 401(k) account, in April 2023. On April 13, Paychex issued and mailed Handy two checks, the filing states.
The checks were stolen before Handy could deposit them and Paychex has refused to provide a replacement check or otherwise process access to his funds, “of which Handy hereby seeks recovery,” argue Handy’s attorneys.
“Paychex breached that [fiduciary] duty by failing to reissue a check for the stolen funds, failing to seek recovery from the banks involved with the check clearing process and ultimately, failure to reunite Handy with his money,” his attorneys wrote.
Handy’s state complaint seeks damages of $383,214, plus fees, costs and interest.
Representatives of Paychex declined to comment on the ongoing litigation. Representatives of the attorneys for Handy and Elm Street Technology did not respond to requests for comment.
Paychex is the largest 401(k) recordkeeper for plans with less than $10 million in assets in 2022, according to the PLANSPONSOR 2023 Recordkeeping Survey.
The federal New York lawsuit is Dylan Handy, v. Paychex, Inc.
Paychex is represented by attorneys with the law offices of Nixon Peabody LLP. Handy is represented by law firm Corbett Rights, P.C.