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Austin’s HBMG agrees to repay diverted retirement funds

by on
in Employee Benefits Program,Employment Law,Human Resources

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.

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