Posted by Tamara
A Hawaii employee is suspicious about his 401k statements. His contributions are deducted from his paycheck, but don’t show up as deposits on his 401k statements. What actions should the employee take, if any?
The Hawaii employee should immediately place a call to the Employment Benefits Security Administration (EBSA) at 866-444-3272. The situation sounds as though the employer has misappropriated the employee’s 401k funds, and the EBSA has the power to take legal action.
The relevant law is the Employee Retirement Income Security Act of 1974, also known as ERISA. This federal law sets the standards for the majority of pension and health plans (including 401ks) that are voluntarily established by private industry. ERISA also protects the employees in these plans.
In addition to contacting EBSA, the employee should check with his state Department of Labor. Several states have enacted laws which mandate that employers abide by all promises made to employees regarding benefits, including 401ks. These laws are normally enforced by the state’s Department of Labor.
Unfortunately, situations like this man’s 401k problem occur with alarming frequency. Employers have used employee benefit funds to boost their operating accounts to solve cash flow problems, to buy expensive houses and cars, and in one case, to renovate a union-owned golf course.
In 2006, the U. S. Department of Labor recovered over $25 billion in misappropriated employee benefits. This amount represents a mere fraction of what was taken, possibly as little as 25%. Some employees received all of their money, but many workers only received a small portion of what they had invested.
The EBSA works hard to see that when funds are misappropriated, the employees get back every penny. Not all employee plans, however, come under their jurisdiction. ERISA applies to the majority of private industry plans, but doesn’t cover plans established by churches for their employees. Nor does it apply to government established or maintained programs. All plans set up simply to comply with disability, unemployment or workers compensation laws are exempt as well.
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