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June 14, 2004
DOL Lawsuit Against Alabama 401(k) Plan Is Settled
Fiduciaries of a 401(k) plan for a Huntsville, Alabama, company have agreed to a settlement with the U.S. Department of Labor, after being accused in a DOL lawsuit of failing to deposit employee contributions to the plan and not holding plan assets in trust.

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The settlement, announced by the DOL, involves the Smith Advanced Technology Inc. Company president Bill G. Smith already has restored $44,621.48 to the plan as restitution for using employee 401(k) contributions to pay corporate expenses and creditors, according to the DOL.

In addition, the settlement permanently bars Smith from serving any more plans governed by Employee Retirement Income Security Act (ERISA). Two trustees, Jerry Peevy and Bart Smith, are barred from serving plans for three years. In an earlier settlement, trustee Glen D. West made restitution.

The DOL says it sued the defendants on November 14, 2003, in federal district court in Birmingham. It accused them of violating ERISA by failing to remit employee contributions to the plan at various times between June 1, 2001, and March 31, 2002. The suit also alleged that the defendants did not hold the plan's assets in trust.

Smith Advanced Technology was a software provider to cable and utility companies and sponsored the plan for 31 participants, according to the DOL. The 401(k) had $685,949 in assets at the end of 2000, which has since been distributed to participants.

The DOL advises that employers who have "similar problems" but aren't yet under investigation may be eligible to participate in its Voluntary Fiduciary Correction Program (VFCP). It requires employers to make workers whole but allows them to avoid enforcement actions and civil penalties as well as any applicable excise taxes. For more information about the VFCP, visit

"Our court action ensures that these plan participants recoup the money they set aside for their retirement years," said Howard Marsh, Atlanta regional office director of the DOL's Employee Benefits Security Administration, which investigated the case.

Employers and employees can reach EBSA at 404.562.2156 or EBSA's toll free number, 1.866.444.EBSA (3272), for help with any problems relating to private-sector pension and health plans.

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