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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
A former pension plan trustee and plan participant who repeatedly raided the plan's assets and overstated its value was not entitled to later receive plan benefits in Katzenberg v. Lazzari, according to the U.S. Court of Appeals in New York City (CA-2).
A former company owner, who was also the pension plan trustee and a plan participant, sought an award of pension benefits under ERISA §502 for the plan's failure to provide him with a summary plan description (SPD), as well as an award of attorney's fees. According to the Second Circuit, the district court did not err in concluding that the former owner/trustee should forfeit his entitlement to benefits under ERISA §409(a), which provides that a fiduciary who breaches his duties under ERISA is personally liable to make good to the plan any losses resulting from the fiduciary breach. The former owner/trustee repeatedly raided the plan and overstated its value to minimize the company's required annual contribution, the court noted. Thus, the court ruled that, where a fiduciary "shows such contempt for the beneficiaries to whom he owes a legal duty," the entry of a permanent injunction barring him from receiving benefits in order to make the pension plan fund whole was not an abuse of discretion.
Six-year statute of limitations appropriate
Further, the appellate court indicated that the district court properly used the six-year statute of limitations under ERISA §413, which applies to cases of fraud or concealment, rather than the three-year statute of limitations under ERISA §413(2). According to the court, the former owner/trustee's conduct does not have to constitute fraudulent concealment under ERISA in order to trigger the six-year statute of limitations. Regardless of whether the former owner/trustee attempted to conceal his activities, the court said, the record supports the district court's conclusion that, as plan trustee, he knowingly misrepresented the plan's value and removed plan assets without authority or adequate documentation.
As for the SPD claim, the Second Circuit agreed with the district court that, as the sole trustee with knowledge of the plan for more than two decades, the former owner/trustee could not plausibly claim that, even after his departure from the company, he lacked the proper information to know where he stood with respect to the plan. Finally, the appellate court said that the district court's decision not to award attorney's fees to the former owner/trustee was not an abuse of discretion. Thus, the district court's judgment was affirmed.
For more information, visit http://www.wolterskluwerlb.com/rbcs.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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