Court orders Minnesota IT company to restore $29K in employee retirement plan contributions, bars employer from operating plan

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Court orders Minnesota IT company to restore $29K in employee retirement plan contributions, bars employer from operating plan

Date of Action: July 19, 2024

Type of Action: Default judgment

Company/Owners: Virtual Matrix Corp.

Suman Thotakura

Virtual Matrix 401(k) Profit Sharing Plan

Resolution: A default judgment entered by the U.S. District Court of Minnesota on July 19, 2024, orders Virtual Matrix Corp. and Suman Thotakura to restore $24,847 in employees' voluntary salary contributions and $759 in participant loan repayments and lost opportunity costs of $3,955 to the Virtual Matrix 401(k) Profit Sharing Plan.

The judgment also permanently bans Virtual Matrix Corp. and Thotakura from serving or acting as fiduciaries to any ERISA-covered employee benefit plan and removing them from any positions they now hold as fiduciaries of the plan. Further, the judgment allows the plan to set off $29,562 of Thotakura's individual account to restore the losses to the plan resulting from his fiduciary breaches.

The court appointed AMI Benefit Plan Administrators Inc. as an independent fiduciary to terminate the plan and issue distributions to eligible participants.

Background: The Secretary of Labor filed a lawsuit on Aug. 30, 2023, after the department's Employee Benefits Security Administration found the Edina, Minnesota, technology consulting company and Thotakura failed to remit the voluntary salary contributions and participant loan repayments to the Virtual Matrix 401(k) Profit Sharing Planfrom April 30, 2021 to June 30, 2022, in violation of federal law.

Employers and workers can reach EBSA toll-free at 866-444-3272 for help with problems related to private sector retirement and health plans. Learn more about EBSA.

Quote: "The court's action restores to participants their voluntary salary contributions that they trusted were earning interest to prepare for their future," said Employee Benefits Security Administration Regional Director Mark Underwood in Kansas City, Missouri. "Failing to forward voluntary employee contributions to employee retirement plans violates their trust and directly impacts their retirement savings."

Docket Number: Case No. 0:23-cv-2677