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DOL Files Complaint Against Plan Fiduciaries for Using 401(k) Contributions and Loan Repayments to Fund Plan Sponsor’s General Operating Expenses


May 2015

On April 10, 2015, the DOL filed a complaint against Enterworks, Inc., the Enterworks, Incorporated Shared Savings Plan, and two individual fiduciaries of the Savings Plan (the Defendants). In the complaint, the DOL alleges that the fiduciaries did not remit certain employee deferral contributions and loan repayments to the Savings Plan, remitted certain deferrals and loan repayments late, and did not deposit interest on delinquent contributions. The DOL is asking the court to issue an order that seeks various forms of relief, including (i) requiring Enterworks and the two individual fiduciaries to restore losses to the Savings Plan, (ii) requiring the Savings Plan to offset any account balances of the individual fiduciaries for the losses if they are not otherwise restored, and (iii) permanently enjoining Enterworks and the two individual fiduciaries from acting in fiduciary capacities for any ERISA plans in the future. The DOL filed two similar complaints on March 27 and April 1.

These complaints should serve to remind plan sponsors that the DOL actively enforces the requirement that employee deferrals and loan repayments be segregated from general assets and remitted to a 401(k) plan’s trust as soon as reasonably possible and that fiduciaries can be held personally liable for not doing so.

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