The courts sent a clear message in this case: Fiduciaries that fail to forward workers’ 401(k) contributions to the plan in a timely manner can face more than just fines.
Here’s the background on two execs who found out the hard way.
While serving as trustees of the now defunct Lunde Electric Company 401(k) plan, Company Chairman Sigmund Eriksen and CEO and President Raymond Eriksen used employees’ contributions to pay for the company’s operating expenses for more than two years.
A jury convicted the Eriksens of violating federal criminal law for embezzling or converting Employee Retirement Income Security Act (ERISA) plan funds – and making false or misleading statements in an ERISA document.
Result: The former Lunde execs were sentenced to two years of probation, a $20,000 fine and 240 hours of community service.