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401K Misappropriation in Ohio

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My former employer in Wickliffe, Ohio has taken money out of my paycheck during the 2007 year but never put this money into my 401K. I had never signed documents or agreed to this practice. I should mention that everyone who participated in the 401K at the company received the same treatment.
I quit working for the company on September 15, 2007 and since then one of the owners has passed away. Before I left I set up a couple of meetings to discuss this matter with the owners of the company, however, nothing was ever resolved.
My paystub indicates that the money (over $5,000) was taken out of my paychecks. My last statement as well as telephone correspondence between the plan participants are aware of this matter. I am also concerned about being taxed on money that I never received either in the 401K or directly.
My question: How do I launch a formal complaint againt my former employer regarding taking this money from each of my paychecks over the 2007 year and never putting it into my 401K? Also, how do I go about getting this money (over $5,000), put into my 401K?

From your description, it certainly sounds like the employer has misappropriated funds earmarked for an employee 401k account.

The Employee Benefits Security Administration or EBSA enforces the federal Employee Retirement Income Security Act of 1974 (ERISA). The ERISA is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.

Run, do not walk, to the nearest phone and call the EBSA at 866-444-EBSA (866-444-3272.) The sooner this is reported, the better chance that the EBSA will be able to recover all or some of the missing money.

Some states also require that employers make good on promised benefits including 401ks. Contact the Wage and Hour Division of the Department of Labor in your state (although it may have a different name, depending upon the state.) In Ohio, that’s the Division of Labor and Worker Safety at the Ohio Department of Commerce. The phone number is 614-644-2239.

Federal (and in some cases, state) law also prohibits employers from making unauthorized deductions from paychecks. If you did not agree to these deductions, that should be reported to the federal Wage and Hour division of the U.S. Department of Labor at 866-4-US-WAGE (866-487-9243.)

 

Telephone conversations are nearly meaningless in this situation. It is all too easy for the employer to deny that they ever took place.  All future communication between you and the company should be in writing, preferably by certified mail with proof of delivery. Keep copies of all of your correspondence with the company on this subject. Sit down right now and make a record of every phone conversation that you have had about this subject, who the conversation was with and the results of the conversation. You may also want to send a letter to the company recapping all the phone communication that you have had in the past about this matter, in addition to calling the feds.

Sadly, the situation that you describe is all too common. In 2006, the U.S. Department of Labor recovered more than $25 billion in employee benefit funds that had been misappropriated by employers. Those funds included 401ks, pension accounts and health care funds. By some estimates, only about 25% of the amount that was taken was recovered.

In some cases the U.S. Department  of Labor is able to recover all the funds misappropriated from employees. In others, the employees only receive a portion of the amount. In cases where the company has gone bankrupt, the employees may receive nothing.

Speak with a tax attorney or qualified tax professional about taking a deduction from your income taxes for this money, which has essentially been stolen from you.

 

This article is for informational purposes only, and does not constitute legal advice. You may want to consult an attorney, ASAP.

 

In general, ERISA does not cover group health plans established or maintained by governmental entities, or by churches for their employees. It also does not cover plans which are maintained solely to comply with applicable workers compensation, unemployment, or disability laws. ERISA also does not cover plans maintained outside the

United States primarily for the benefit of nonresident aliens or unfunded excess benefit plans.