My Current State: 

Illinois 401k


Posted by Tamara

Illinois employees are wondering if their benefit funds are protected by law.

The answer is yes, for most plans. The majority of private industry pension and health plans, including 401ks are protected by ERISA (Employee Retirement Income Security Act of 1974). This federal law applies to Illinois employees and to workers across the country.

ERISA sets the minimum standards for employee health and pension plans, and provides protection for the employees in these plans. Not all plans, however, are covered by ERISA. A plan established solely to comply with unemployment, workers compensation or disability laws is not covered under ERISA. Neither are plans set up by churches for their employees.

The Employment Benefits Security Administration (EBSA) is charged with enforcing ERISA and can be reached at 866-444-3272. Sadly, this number is called all too often to report misappropriation of funds by employers. In 2006, the U.S. Department of Labor recovered over $25 billion in employees funds, an amount that some estimates claim as only a quarter of the monies taken.

Consider Josh, an Illinois employee who contributes to the 401k plan offered by his employer. The contributions are deducted from his paycheck, but they never show up as deposits on his 401k statements. Josh’s employer could be misappropriating these funds.

The moment Josh suspects there’s a problem, he should call EBSA. Chances for recovering the funds are better if the problem is reported quickly.

In addition to EBSA, some states have laws mandating that employers make good on promised employee benefits. These laws are usually enforced by the Department of Labor for that state.

Some of the cases report that instead of holding these funds for the employees, companies deposited the money into their operating accounts to solve cash flow problems. There were also situations where company officers used the money for their personal benefit, including buying cars, houses, jewelry and even race horses.

Sometimes, it is possible to recover all of the misappropriated funds. Unfortunately, employees often receive only a portion of what was taken.

 

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