EBSA Settles with Electric Cooperative Association
The National Rural Electric Cooperative Association will restore $27 million to three of its employee benefit plans covered by ERISA.
The National Rural Electric Cooperative Association agreed to restore $27,272,727 to three of its sponsored employee benefit plans covered by the Employee Retirement Income Security Act, the Labor Department announced July 5, saying the agreement followed an investigation by its Employee Benefits Security Administration (EBSA) that found the association "selected itself as a service provider to the plans, determined its own compensation and made payments to itself that exceeded NRECA's direct expenses in providing services to the plans, in violation of ERISA."
"Workers should be able to have confidence that their hard-earned retirement savings are being properly managed," said Labor Secretary Hilda Solis. "This settlement benefits tens of thousands of NRECA plan participants by reducing their plan administration costs."
The DOL news release said NRECA won't provide administrative services to the NRECA Retirement Security Plan, the NRECA 401(k) Plan, and the NRECA Group Benefits Plan without contracting or agreeing for the plans to be approved by an independent fiduciary. "The independent fiduciary must determine whether the use of NRECA to provide administrative services to the plans is prudent and reasonable, determine the categories of direct expenses that NRECA may charge to the plans, and the methods of calculating those expenses, and monitor NRECA's compliance with certain terms of the agreement. The agreement also provides that during a 60-month period following the implementation date, NRECA shall discount the amount of permissible direct expenses for which it seeks reimbursement from all three plans in the amount of $22,727,272. The balance of the settlement payment, $4,545,455, already has been paid directly to the NRECA 401(k) Plan," the release states.
"This settlement sends a clear message to plan fiduciaries that they cannot profit from selecting themselves to provide services to plans," said Phyllis Borzi, assistant secretary of labor for employee benefits security.
EBSA's Washington District Office carried out the investigation. Visit http://www.dol.gov/ebsa for more information.