can former shareholders of plan sponsor be held liable for plan error in this circumstance?

[mariemonroe]

Plan sponsor is judicially dissolved due to a shareholder dispute and a receiver is appointed to liquidate the company.

Receiver terminates the 401(k) Plan and distributes assets to plan participants.

Plan audit for final 5500 reveals numerous errors in plan operation that individually are insignificant.

The cost to correct the errors would be very significant and would result in participants receiving very small amounts

 IF receiver choses not to correct plan errors, can receiver be held liable if the plan is audited? What about the former shareholders of the company?

 

[C. B. Zeller]

If the receiver is a Qualified Termination Administrator, then they have fiduciary protection against any breaches that occurred prior to their becoming QTA under the final abandoned plan regulations.

The former shareholders, to the extent that they failed to execute their fiduciary duties, would still be liable.

[Mike Preston]

3 hours ago, mariemonroe said:

IF receiver choses not to correct plan errors, can receiver be held liable if the plan is audited? What about the former shareholders of the company?

 

You have come to the wrong place. The people who can answer these questions are those that operate as what you have just called the receiver. They know the jurisdiction and they know how the contingent liability if any is to be satisfied.

[QP_Guy]

The interesting question to me is "when does the non correction of a discovered fiduciary breach become a current breach by the QTA?"  And Master Preston has it right: the QTA will know what will get them in trouble.  

[Mike Preston]

I ignored the qta concept completely. It has been my experience that they are like unicorns. Theoretically they exist but darn if you can find one in the wild. I was talking about the receiver.

[mariemonroe]

I had to look up QTA. Receiver is definitely not a QTA.  Thanks all.