Austin-based information technology firm HBMG and its president, Manuel Zarate, have agreed to settle a lawsuit alleging the company failed to transfer employee retirement fund contributions into its 401(k) program.
Instead, the federal Employee Benefits Security Administration claims, Zarate diverted the retirement plan funds for his own benefit.
Under the settlement, HBMG and Zarate will restore about $65,000 in employee contributions, plus interest. Zarate can no longer have fiduciary responsibilities for a plan covered by the Employee Retirement Income Security Act (ERISA).
HBMG’s 401(k) plan will be dissolved and participants may roll over their contributions to other retirement plans as soon as the monies are paid.
Note: Company 401(k) plans aren’t the owners’ personal bank accounts. The law requires employers to deposit employee contributions in a timely fashion.