🗞️ Infrastructure & Development Engineering Inc Ordered to Restore Workers' 401(k) Contributions
Federal court ordered Ohio engineering firm to pay $45,699 to employee retirement accounts after withholding contributions from paychecks but failing to deposit them into the 401(k) plan—a violation of ERISA.
A federal court has ordered Infrastructure & Development Engineering Inc. and its owner James Hahn to restore $45,699.63 to employee retirement accounts after the U.S. Department of Labor found they violated the Employee Retirement Income Security Act (ERISA) by withholding employee 401(k) contributions from paychecks but failing to deposit them into the company's retirement plan between Feb. 10, 2017, and Aug. 19, 2022.
The December 16, 2025 consent order from the U.S. District Court for the Southern District of Ohio also requires Hahn to terminate the company's 401(k) plan and be removed as a fiduciary. The company and owner were assessed an additional $9,139.93 civil penalty for fiduciary breaches.
This case highlights a common but serious ERISA violation. Under federal law, employers must deposit employee contributions to retirement plans as soon as they can reasonably segregate them from company assets, but no later than the 15th business day of the following month. For plans with fewer than 100 participants, there is a 7-business-day safe harbor. Holding onto employee contributions constitutes a prohibited transaction because it allows employers to use plan assets for their own benefit, violating their fiduciary duty to act solely in participants' best interests.
In fiscal year 2024, the DOL's Employee Benefits Security Administration (EBSA) recovered $1.384 billion for retirement plans, participants, and beneficiaries. Of the 729 civil investigations closed, 71% resulted in monetary recoveries or corrective actions. The agency oversees approximately 2.6 million health plans and 801,000 private pension plans covering 156 million individuals.
Employers who discover late deposits have several correction options. They can use the Voluntary Fiduciary Correction Program (VFCP), which allows plan sponsors to correct specific ERISA violations without facing enforcement actions. Alternatively, employers can self-correct by depositing the late contributions, calculating and funding lost earnings, and reporting the issue on Form 5500 while paying a 15% excise tax on lost earnings via Form 5330.
The consequences of failing to deposit employee contributions timely can be severe. Beyond the requirement to restore lost earnings, employers face potential civil penalties of up to 20% of late contributions, IRS excise taxes of 15% per year on the amount involved, and in willful cases, criminal prosecution with fines up to $100,000 and imprisonment up to 10 years under ERISA Section 501.
Key Points
- The Violation: Infrastructure & Development Engineering withheld employee 401(k) contributions from paychecks but failed to deposit them into the plan for over five years (Feb. 10, 2017 - Aug. 19, 2022)
- The Penalty: Court ordered $45,699.63 restored to employee accounts plus $9,139.93 civil penalty; owner must terminate plan and be removed as fiduciary
- The Law: ERISA requires employers deposit employee contributions as soon as reasonably possible, no later than the 15th business day of the following month (7-day safe harbor for small plans)
- The Problem: Holding employee contributions in company accounts is a prohibited transaction—it's using plan assets for employer benefit, violating fiduciary duty
- Broader Context: In FY 2024, DOL recovered $1.4 billion for retirement plans, with 71% of investigations producing monetary results or corrective actions
- Correction Options: Employers can use Voluntary Fiduciary Correction Program (VFCP) or self-correct with lost earnings calculations and 15% excise tax
- Serious Consequences: Beyond restitution, penalties include civil fines up to 20% of amounts, excise taxes, and potential criminal prosecution for willful violations
Primary Source Author: U.S. Department of Labor, Employee Benefits Security Administration
Primary Source: U.S. Department of Labor, Employee Benefits Security Administration
Primary Source Link: https://www.dol.gov/newsroom/releases/ebsa/ebsa20260114
