U.S. District Judge Douglas P. Woodlock of the U.S. District Court for the District of Massachusetts ruled that Employee Retirement Income Security Act (ERISA) Section 403 imposed the duty on a trustee to monitor and pursue unpaid employer contributions. A plan provision going against that obligation would be contrary to public policy and shouldn’t be allowed to stand, Woodlock asserted.
The ruling came in a U.S. Department of Labor suit
against Plan Benefit Services, Inc. regarding the master
plan servicing more than 1,000 individual workplace
Under the master plan and trust, each employer adopted an
individual retirement plan for its employees and deposited
the required contributions in the master trust. The master
plan sponsor was responsible for the master plan’s
language; for amending the plan and trust documents; and
for appointing and removing the trustee.
Woodlock said he performed a property rights analysis and concluded that ordinary notions of property rights include the right to collect unpaid contributions. The item doing away with the mandate to pursue unpaid contributions violated Section 410 of ERISA that voids such provisions if they are found to violate public policy.
The court ordered the section removed from the plan documents.
Woodlock’s ruling is available here .
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