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Liability for Fiduciary Breach Not Dischargeable in Personal Bankruptcy

The Department of Labor (?Ç£DOL?Ç¥) sued the president of several related companies to establish his personal liability for more than $67,000 in employee contributions never remitted to the employer sponsored benefit plans and to prevent him from discharging this liability in his pending personal bankruptcy action.?á Over a nearly three-year period, the companies withheld but never remitted the employee contributions to the companies?ÇÖ group health and 401(k) plans (the ?Ç£Plans?Ç¥).?á The court concluded that, under ERISA, the president was a ?Ç£functional fiduciary?Ç¥ of the Plans because he exercised discretionary control over plan assets?Çöthe employee contributions?Çöwhen he retained those funds in the companies?ÇÖ general assets to pay other corporate debts, rather than timely remitting them to the Plans as required by ERISA.?á The president?ÇÖs conduct also violated several other ERISA provisions, including the duty of loyalty, exclusive benefit rule, and prohibited transactions rule.?á Accordingly, he was personally liable for the unremitted… Continue Reading

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