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Avoiding Employment Fraud

Many employees participate in employer-sponsored retirement savings plans such as 401(k) plans. These plans allow you to have a portion of your pre-tax income deducted from your paycheck and invested in a tax-deferred account.

An anti-fraud campaign by the Department of Labor uncovered a small fraction of employers who abused employees’ 401(k) contributions, either by using the money for corporate purposes, or by holding the money for too long. The Department of Labor issued a list of ten warning signs that your retirement savings contributions are being misused.

Ten Warning Signs That Your 401(k) Contributions Are Being Misused

  1. Your 401(k) or individual account statement is consistently late or comes at irregular intervals.
  2. Your account balance does not appear to be accurate.
  3. Your employer failed to transmit your contribution to the plan on a timely basis.
  4. There is a significant drop in your account balance that cannot be explained by market declines.
  5. Your 401(k) or individual account statement does not show your contributions.
  6. The investments listed on your statement are not what you authorized.
  7. Former employees are having trouble getting their benefits paid on time or in the correct amounts.
  8. There are unusual transactions, such as a loan to your employer, a corporate officer, or one of the plan trustees.
  9. There are frequent and unexplained changes in investment managers or consultants.
  10. Your employer has recently experienced severe financial difficulty.

If you find any of this occurring, contact the Employee Benefits Security Administration at its toll free number, (866) 444-3272.