The following is the article originally published in the Winter 1996 issue of Working People.
According to the Department of Labor, employer misuse of their workers’ 401(k) savings accounts is a growing problem. The Labor Department has been investigating hundreds of companies suspected of misusing their employees’ retirement funds. In March, the department announced a six month amnesty program to allow companies to restore contributions they failed to deposit, whether deliberate or not. In recent years, 401(k) plans have become an increasing source of retirement savings, currently amounting to over $600 billion.
To help workers determine whether their company is properly managing 401(k) funds, the Labor Department issued a list of 10 warning signs:
1. Your statement is consistently late or comes at irregular intervals.
2. Your account balance doesn’t appear to be accurate.
3. Your employer held your contribution for more than 90 days before depositing it in your account.
4. There is a significant drop in your account balance that can’t be explained by normal fluctuations in the market.
5. You receive savings plan statements that do not list your paycheck contribution.
6. Investments listed on your statement aren’t what you authorized.
7. Former employees are having trouble getting their benefits paid on time or in correct amounts.
8. You see unusual transactions such as a loan to the employer, a corporate officer or one of the plan trustees.
9. There are frequent and unexplained changes in investment managers and consultants.
10. Your employer has recently experienced severe financial difficulty.