Keep a close eye on your account to make sure your money is safe

Some employers steal from 401(k) plans

By Robert Powell, MarketWatch

BOSTON (MarketWatch) -- Most of the time, the money you contribute to your 401(k) ends up in your account. But there are times when it doesn't, as evidenced by a recent flurry of press releases from the U.S. Labor Department's Employee Benefit Security Administration.

Roughly once a week in July alone, some of the 150 million Americans covered by the more than 700,000 employer-sponsored retirement plans received notice that their hard-earned money ended up in the wrong pocket.

To be sure, times are tough for small- and midsized business owners. And now more than ever, these owners, many of whom also serve as the company's retirement plan fiduciary, are caught between a rock and a hard place: Pay the bills or deposit their workers' money into the 401(k) plan. Sometimes, employers make the wrong choice.

But there are things you can do to protect your retirement savings long before your employers end up in a Labor Department press release for the wrong reason.

• Monitor your account statements to ensure that their contributions are being timely deposited and invested in the right funds. Usually, you can get your account balance on the internet, via an 800 number, and in hard copy once per quarter. Check all three to make sure they are in sync. You should be even more conscientious about those reviews if you have reason to believe that your employer has cash-flow or other financial problems. Your employer is required to deposit your contribution into your account within seven days of the payroll date. If your employer is taking longer than seven days to deposit your funds, and especially if they are taking more than 15 days, you should call the Labor Department immediately. Assuming that your contribution is being made in a timely manner, check the total withheld from your paycheck for a quarter or year against the total of the corresponding statement.

• Learn what your plan fiduciary's responsibilities are and what recourse you might have if they don't follow the required conduct standards. For instance, "if the plan lost money because of a breach of their duties, fiduciaries would have to restore those losses, or any profits received through their improper actions," the Labor Department said on its website. And if an employer did not forward participants' 401(k) contributions to the plan, they would have to pay back the contributions to the plan as well as any lost earnings, and return any profits they improperly received, according to the Labor Department.

After you call the Labor Department, it will conduct an investigation and, if regulators find that there has been an error or misappropriation it will intervene. In some cases there could be a civil or a criminal action.

Another option if you suspect wrongdoing is to file a lawsuit against your employer. Recently, the Supreme Court clarified that an individual 401(k) participant with a grievance can do so.

At the end of the day, what happens to your 401(k) money is up to you. You are the watchdog. You are your own advocate.

http://www.marketwatch.com/story/some-employers-steal-from-401k-plans-2010-07-22