United Employee Benefit Fund, Govt Reach Agreement Over Loan Allegations

What started with a bang has ended with a whimper. It began with the Dept. of Labor issuing a press release on Aug. 30, 2011, announcing that the DOL was seeking “to recover more than $1 million in improper and delinquent loans made from United Employee Benefit Fund.” It ended with an agreement between the parties to pay their own attorneys fees and expenses, amend the plan documents, and issue some 1099s.

On July 2, 2012, the Dept. of Labor and United Employee Benefit Fund entered into a Consent Order in the U.S. District Court for the Northern District of Illinois, Eastern District, resolving issues the DOL alleged United Employee Benefit Fund had in administering loans within their plan. Specifically, the DOL alleged that United Employee Benefit Fund had issued at least 194 loans from the fund to individual participants between Jan. 1997 and Dec. 31, 2009, some of which lacked proper documentation, were delinquent, or had exceeded 50 percent of the value of the participants’ accrued benefit. In the Consent Order, United Employee Benefit Fund agreed to amend the loan provisions in their plan documents, issue 1099s to participants whose loans are delinquent for more than 120 days, and provide copies of those 1099s to the DOL within 45 days after the 1099 is issued. As part of the agreement, both parties will pay their own attorneys fees, costs and expenses.

The Consent Order does not include any fine or penalty to be paid by UEBF, and the agreement states that it is not binding on any other agency, including the IRS.

The United Employee Benefit Fund was established by the Professional Workers Master Contract Group and the National Production Workers union Local 707 to provide welfare, medical, death, disability and child care facility benefits to the fund’s participants. As of Dec. 31, 2009, UEBF had approx. 281 participants.

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