Posted by Tamara
Many Iowa employees wonder who oversees their 401k plans. In 1974, the federal government established ERISA (Employee Retirement Income Security Act). ERISA sets the standards for most of private industry’s pension and health plans, including 401ks. This federal law applies to employees in Iowa and throughout the United States.
So, what if an Iowa employee suspects her employer of misappropriating some of these funds? For example, she contributes to a 401k. The deductions are taken from her pay, but never show up on her 401k statements. What is her best course of action?
Her best course of action is to call EBSA (Employee Benefits Security Administration) at 866-444-3272 as quickly as possible. EBSA is the group that enforces ERISA and can be instrumental in retrieving employee funds, especially if the problem is reported right away.
ERISA sets the standards for pension and health plans and provides protection for the employees covered by these plans. In addition to contacting EBSA, the employee can also check with the state of Iowa. Some states have established laws forcing employers to make good on promised plans. Usually these laws come under the jurisdiction of the state Department of Labor’s Wage and Hour Division, but the name can vary from state to state.
Sadly, the situation posed about the Iowa employee is not a rare occurrence. In 2006, the U. S. Department of Labor recovered over $25 billion in employee benefits funds, including 401ks, pension and health accounts. According to some estimates, that amount was merely 25% of what was misappropriated.
In some cases, employers deposited these employee funds in their operating account to solve cash flow problems. In other scenarios, company officers used the money to buy houses, condos, jewelry and expensive cars. One union in California used employee benefit funds to renovate its golf course.
Not all pension and health plans are covered under ERISA, such as plans established by churches for their employees. Group health plans set up or maintained by government entities don’t come under ERISA’s jurisdiction, either. Employees would be wise to check with their benefits coordinator to see if their benefit funds are protected.
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