A recent Western District of Virginia court decision, Hammer v. Johnson Senior Ctr., provides a good reminder about the importance of protecting ERISA plan participant funds.
In short, Ms. Hammer, the complainant, had her health plan contribution withheld from her pay but the employer did not then make the payment to the insurer resulting in the health plan being terminated.The complainant challenged these actions on several grounds.Of particular note, the court has found that the plan fiduciary violated their duties of loyalty, care and prudence by misappropriating the participant's funds and further by not notifying the participant of the plan lapse.Several other issues in this matter continue to be litigated, but it is nevertheless very important to note, that any participant money withheld from a participant's pay for the purposes of an ERISA plan, can only be used for the exclusive benefit of plan participants.In no event can the employer use the funds for its own purposes.Further, a plan fiduciary must use extreme care to notify the participants timely of a plan termination.
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CBIZ Inc. published this content on 06 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 January 2021 21:45:04 UTC
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