Is your boss stealing from your retirement account?

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It's bad enough that our 401(k)s melted to a fraction of what they once were before the recession. Now we have to worry about employers stealing from our retirement plans. The U.S. Department of Labor's Employee Benefit Security Administration has been cracking down on a series of 401(k) theft cases this summer.

In early July, for example, the department announced that it had received a consent judgment ordering defendant Eric C. Mitchell and his firm Eric C. Mitchell & Associates to restore more than $20,000 in employee contributions to their 401(k) accounts. Allegedly, Mitchell and his Bedford, N.H.-based company failed to forward employee contributions to their 401(k)s and instead used the money for other purposes.

Don't let your already-depleted retirement fund become a cookie jar for your boss. Greedy companies or those so desperate to pay bills that they snatch your contributions are out there, waiting to make you a victim. Even if you don't suspect any wrongdoing, be on the lookout.
"It's not a bad thing to check in with the Department of Labor quarterly to check up to keep your employer honest," Robert Siciliano, a security consultant to McAfee and identity theft expert, told WalletPop.

Siciliano also recommends taking the following steps to protect your account:

  • Become familiar with the investment plans and the deposits your employer makes. Check your own stubs and keep a running tab of what should be in the account. (The law now dictates that employees have the right to see hard-copy statements every quarter, and that the account balance is also available online.)
  • Monitor your statements carefully. Theft can happen in plain sight because some companies assume their employees are not cross-checking the contributions, the matching and the overall value. Most plans have a toll-free number that can be used to verify funds. Use it.
  • Fact check.There is a form that your employer provides to the Department of Labor called the 5500. Get a copy of it and check it with the Department of Labor for accuracy.

Roughly 150 million Americans are covered by at least 700,000 company-sponsored retirement programs. Of those, an average of 1,500 401(k) embezzlements occur each year, according to Investorprotection.org. Most of these crimes occur at smaller companies where there are fewer security restrictions and fewer people in charge. Sometimes even the bosses themselves act as the plan fiduciary.

Here are some red flags to look out for:

  • If the market is climbing, yet the return on your 401(k) is falling, something may be amiss.
  • Is your employer experiencing financial problems? Fred Reish, a pension attorney, told MarketWatch that workers should be more vigilant if they believe their employer is struggling financially. After all, desperate times sometimes lead to desperate measures.
  • Are your statements arriving late? David Wray, the head of the Profit Sharing/401(k) Council of America, said that can also be a warning sign. New deposits are supposed to appear in the account within seven days of the payroll date.
If anything's fishy, inform your employer. If you don't get satisfaction, then call the Labor Department helpline.

While a certain trust-no-one ethos has emerged in tough times, healthy skepticism can be your best deterrent to ensure that your retirement plan is there for you when you retire, instead of in the hands of a sticky-fingered employer.
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