One company and its owner just got a not-so-gentle reminder that employees’ retirement plan contributions can’t make any unscheduled stops on the way to their accounts.
The Department of Labor (DOL) has ordered Eric C. Mitchell & Associates, Inc., and Eric. C. Mitchell to restore $20,723 in funds to the Medford, NH, company’s 401(k) plan.
Instead of forwarding contributions withheld from employees’ wages for their 401(k) accounts, the company was found to have used the funds for other purposes over a two-year period. That’s a big no-no in the DOL’s eyes.
Result: The DOL ordered Mitchell to empty his 401(k) account to repay par of the shortfall. The rest — plus a 20% penalty — will be covered by the company.
The lesson’s clear: Fiduciaries must act in the sole interest of the plan participants. And when the DOL finds that hasn’t happened, it’ll take the steps necessary to remedy participants’ losses.
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