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Warning Signs That Your 401k Contributions are Being Misused

401k retirement plans allow employees to have deducted from their paycheck a portion of their income on a pretax basis, invest it and pay no taxes on those contributions until the money is withdrawn at retirement.

An anti-fraud campaign by the Department of Labor uncovered a small fraction of employers who abused employee contributions by either using the money for corporate purposes or holding on to the money too long. Here are 10 warning signs that your pension contributions are being misused.

  • Your 401k plan statement is consistently late or comes at irregular intervals.
  • Your account balance does not appear to be accurate.
  • Your employer failed to transmit your contribution to the plan on a timely basis.
  • A significant drop in account balance that cannot be explained by normal market ups and downs.
  • 401k or individual account statement shows your contribution from your paycheck was not made.
  • Investments listed on your statement are not what you authorized.
  • Former employees are having trouble getting their benefits paid on time or in the correct amounts.
  • Unusual transactions, such as a loan to the employer, a corporate officer, or one of the plan trustees.
  • Frequent and unexplained changes in investment managers or consultants.
  • Your employer has recently experienced severe financial difficulty.

Individually, no one of these signs should alarm you, but they should cause you to seek out more information and an explanation. If more than one of these signs appear or they are repeated, you should take immediate action.

What do you do if think you have cause for concern? Click here to find out.

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