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Archived News Release--Caution:
information may be out of date.
For more information call: (202) 219-8921
A nationwide crackdown on 401(k) abuse has resulted in the recovery of
nearly $22 million for 40,800 workers, President Bill Clinton announced today.
The $22 million recovery is part of a national enforcement project to
reduce misuse of 401(k) contributions and ensure pension security for all
Americans. Under the project, department investigators discovered that some
employers were misusing or borrowing their employees' 401(k) contributions for
personal or corporate enrichment.
Clinton also introduced a toll-free publication hotline for workers to
access vital information to help them understand their pension rights and
monitor their pension plans.
The toll-free "800" number is part of the department's Retirement
Savings Education Campaign to raise public awareness about retirement savings
and pension protection. Persons looking for employee benefit literature can
call the hotline at 800/998-7542.
"The Clinton Administration has worked tirelessly to ensure workers'
pensions are not misused," said Acting Secretary of Labor Cynthia A. Metzler.
"Because of this administration's efforts, workers' retirements are safer."
"I'm pleased to report that the private pension system with $3.5
trillion in assets is essentially safe and financially sound," Metzler said.
"Investigations conducted by the Labor Department indicate only a small
percentage of employers are misusing workers' 401(k) money. The vast majority
of plans are honestly, responsibly and safely managed. "
Since starting the project in 1995, the Pension and Welfare Benefits
Administration (PWBA) has opened 1,672 cases; 746 have been closed 262 cases
with violations and monetary recoveries. The $22 million includes monetary
recoveries from these closed cases, cases that are still open and the voluntary
compliance pension payback program. In addition, the agency has received
thousands of calls from workers asking about their 401(k) plans. Often
complaints from workers give the department the first warning sign of a problem
with a plan.
Recent cases investigated by the department:
- The Atlanta Regional Office recovered $26,445 in lost earnings for
119 participants covered by the 401(k) plan of an architectural firm in
Marietta, Ga. The case was opened as a result of a participant complaint.
- In the Boston Regional Office, $2.4 million was recovered for 1,045
participants of a nationwide health care provider in Avon, Conn. For 11 months
in 1996, contributions were withheld from workers' wages, but not transmitted
to the plan.
- A Chicago Regional Office case recovered $27,392 in delinquent
contributions from a South Bend, Ind., trucking company. After the department
discovered that the company was in bankruptcy, the court was petitioned to
authorize payment of delinquent contributions owed to the 401(k) plan.
- The Cin cinnati Regional Office pursued a criminal case that
resulted in a 4-month prison sentence and supervised release for the former
president of a Louisville, Ky., company after his indictment for embezzling
plan money. He pleaded guilty in January 1997 to embezzling $68,933 in employee
contributions from the company's 401(k) plan. The plan covered 16 participants
and had $170,825 in assets.
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- The Los Angeles Regional Office recovered $569,000 in employee
contributions plus $446,578 in employer matching contributions from a Honolulu,
Hawaii, company for 101 plan participants. In addition, the office recovered
$32,652 in earnings attributable to late contributions.
- In the New York Regional Office, $27,000 was recovered for
participants covered by the 401(k) plan of an employee benefit consulting firm.
The firm deducted the money from employees' paychecks but failed to remit it to
the third-party administrator.
- A criminal investigation conducted by the Philadelphia Regional
Office resulted in an indictment against Joseph Guckin, the president and sole
owner of Penjerdel Refrigeration Co. in Philadelphia. Guckin failed to remit
$43,969 in employee contributions to the plan over the period 1990 through
1991. He pleaded guilty in November 1996 to one count of converting plan assets
to the use of his business.
In addition to conducting ongoing investigations, PWBA spearheaded the
Retirement Savings Education Campaign to raise public awareness about what
workers need to do to prepare for retirement and monitor their pension money.
One publication, titled "Protect Your Pension," is a quick reference guide
designed to help workers understand their plans and gives tips on warning signs
they should look for to guard plan money from misuse.
Archived News Release--Caution:
information may be out of date.
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