Human Resource Blog

Montana 401k

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What should an HR person do if she thinks that her 401k contributions are being misappropriated in Montana? Deductions are made from all the employee’s checks, but the 401k statements don’t show any deposits. The company owner is unresponsive when asked about this.

The best suggestion is to move quickly. Call this number right away: 866-444-EBSA (866-444-3272). Report the concerns. The sooner you report it, the more likely it is that the funds will be recovered, because, based on this information, this does sound like a case of misappropriated money.

Pension accounts, health care funds and 401k plans are often plundered by employers. To get an idea of the scope of this problem, consider this: in 2006 alone, $25 billion worth of employee benefit fund money was recovered. But that was only an estimated 25% of the total of misappropriated funding. Sometimes all of an employee’s money can be recovered, but sometimes only a portion.

Often the money went toward shoring up a sinking company by using it to “correct” cash flow problems. Sometimes it paid for condos, cars, jewelry, racehorses, and houses for company officers. In one instance, a California union was the culprit. It used the funds to rebuild a union-owned golf resort.

The agency acting as watchdog is the Employee Benefits Security Administration - the ESBA of the phone number listed above. It is charged with the responsibility of enforcing the so-called ERISA, or Employee Retirement Income Security Act of 1974.

ERISA, a federal law, protects people in voluntarily established employee benefit plans, including 401ks, health plans, and pension plans, by setting minimum standards. ERISA, by the way, does not cover plans operated by or created by government entities or by churches. Nor does it cover unfunded excess benefit plans or plans operated outside the U.S. for nonresident aliens.

Some states also oversee these plans. They require that companies make good on promised benefits, including those in 401k plans. Consider contacting the wage and hour division of the state’s labor department (it may operate under a different name.) JH