Proof Again That Small Plans and Their Fiduciaries Can Get Sued

I’ve heard of for years on how small 401(k) plans and their plan fiduciaries don’t get sued. While they are never going to be the target for a class action lawsuit because they don’t have enough assets to justify an ERISA litigator to use, they’re still a threat.

While it won’t make the evening news, there is another Department of Labor (DOL) lawsuit against a small plan maintained by a defunct plan sponsor and the plan fiduciary who was responsible for a not so nice thing. The DOL is suing a defunct Pennsylvania employer Wind Turbine Solutions LLC and the plan fiduciary Matthew Kenneth Smith for what went on in the Wind Turbine Solutions LLC Retirement Trust.

From 2011 until the company folded in April 2014, Wind Turbine Solutions and Smith served as plan fiduciaries. They withheld approximately $78,000 from the employee participants’ wages and salary for salary deferrals; failed to transfer a significant amount of the deferrals to the plan; and failed to pay interest on the unremitted contributions.

The remittance of salary deferral contributions is a big thing for the DOL to crack down on, so it’s always important for a plan sponsor whether in business distress or not, to timely remit what’s been withheld.

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