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Archived News Release — Caution: Information may be out of date.

U.S. DEPARTMENT OF LABOR

PENSION AND WELFARE BENEFITS ADMINISTRATION

LABOR SECRETARY REICH ANNOUNCES 401(k) WARNING SIGNS AS PART OF PENSION FRAUD ENFORCEMENT PROGRAM

Tuesday, Nov. 28, 1995

For more information call: (202) 219-8211.

Secretary of Labor Robert B. Reich today launched a campaign against pension fraud that includes 10 warning signs workers can use to protect their 401(k) plan contributions from employers who may misuse the money.

The consumer campaign is part of a nationwide anti-fraud program by DOL's Pension and Welfare Benefits Administration (PWBA), which oversees federal laws governing private pensions.

More than 300 companies nationwide are being investigated for potential violations, both civil and criminal. Since the effort began earlier this year, more than 100 other cases have been closed, resulting in the recovery of more than $3.2 million for more than 2,800 workers.

Reich said, "The vast majority of 401(k)s are safe and honest, but we've found that in some cases, employers are taking money from 401(k)s. That's wrong and we want to stop it - that's what this enforcement effort is about. We need consumers' help to track down fraud."

PWBA investigators are working with federal, state and local prosecutors on the cases, Reich said.

The 10 warning signs released by Reich which consumers should use when monitoring their 401(k) plans are:

  1. Your 401(k) statement is consistently late or comes at irregular intervals.
  2. Your 401(k) account balance doesn't appear to be accurate.
  3. Your employer held your contribution for more than 90 days.
  4. A significant drop in your account balance that can't be explained by normal market ups-and-downs.
  5. 401(k) statement shows your contribution from your paychecks wasn't made.
  6. Investments listed in your account balance aren't what you authorized.
  7. Former employees are having trouble getting their benefits paid on time or in correct amounts.
  8. Unusual transactions, such as a loan to the employer, a corporate officer, or one of the plan trustees.
  9. Frequent and unexplained changes in investment managers or consultants.
  10. Your employer has recently experienced severe financial difficulty.

"We will aggressively investigate to make sure that money is invested in workers' 401(k) plans, but it is the workers themselves who will be the first line of defense. That's why we're issuing these warning signs - to help workers ask the right questions," said Reich. "The law requires that workers be given statements and information about their 401(k) plans and contributions and they need to be informed so they know what to look for."

Reich suggests that people who have questions about their 401(k) plans, and who are unable to resolve them with their employer or plan administrator, can call PWBA regional offices, or the PWBA national office.


Archived News Release — Caution: Information may be out of date.