DOL Asks Appeals Court to Make Lawyer Pay Into 401(k)

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jacklyn Wille

Aug. 12 — A Pennsylvania lawyer should be forced to contribute more than $50,000 to his employees' 401(k) plan, the Department of Labor told a federal appeals court ( Sec. U.S. Dep't of Labor v. Kwasny, 3d Cir., No. 16-01872, brief filed 8/10/16 ).

In February, the DOL obtained a court order requiring Richard J. Kwasny to restore his employees' 401(k) contributions to the plan after Kwasny allegedly kept the contributions in his firm's bank account in violation of federal law.

Kwasny appealed this order to the U.S. Court of Appeals for the Third Circuit, arguing that the department's lawsuit against him was untimely and barred by another case brought by one of the attorneys at Kwasny's firm.

In response, the DOL on Aug. 10 filed a brief arguing that Kwasny already admitted that his alleged activities—commingling his workers' 401(k) deductions in the firm's general account rather than forwarding them to the plan—constituted a fiduciary breach under the Employee Retirement Income Security Act.

The department also challenged Kwasny's claim that the DOL's lawsuit against him was barred by an earlier court case filed by one of the attorneys at Kwasny's firm. According to the department, it had no connection with that attorney and his lawsuit therefore couldn't interfere with the department's.

Finally, the DOL disputed Kwasny's argument that the department filed its lawsuit outside the applicable statute of limitations. Specifically, Kwasny failed to establish that the department had knowledge of his alleged breaches more than three years before it filed suit, the DOL argued.

The department's brief was submitted by M. Patricia Smith, G. William Scott, Thomas Tso and Leonard H. Gerson. Kwasny represents himself.

To contact the reporter on this story: Jacklyn Wille in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

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