November 22nd, 2010 08:57 EST
Pension Red Alert: Where Will Your Money Be When You Need It?
The U.S. Department of Labor`s Employee Benefit Security Administration, or EBSA, has just announced a series of enforcement actions to protect more than $7 million for workers in retirement and health plans governed by the Employment Retirement Income Security Act, or ERISA.
The Department of Labor estimates that there are approximately 708,000 401(k) and Savings Incentive Match Plans for Employees, commonly known as SIMPLE IRA plans currently in operation under ERISA, plus another 2 million employer-sponsored health plans and an additional 2 million employer-sponsored welfare plans consisting of health insurance, life insurance and disability insurance into which employees make payroll-deduction contributions.
"Approximately 70 percent of the nation`s employer sponsored retirement and health plans are out of compliance at some time in any given year," estimates Alan D. Lebowitz, deputy assistant secretary for program operations of EBSA.
"Most of the plans come within compliance voluntarily," Lebowitz said, stressing that the 24 civil actions filed in federal district court under ERISA by the Department of Labor yesterday were aimed primarily at protecting for employee recovery approximately $7 million in worker payroll deductions made at companies now in bankruptcy or in serious financial difficulty.
"As the economy remains difficult, we have seen a jump in non-compliance cases involving employers not placing either on a timely basis employee or at all payroll deduction in work-related retirement and health plans," Phyllis C. Borzi, assistant secretary at EBSA, said. "In cases where a company is bankrupt or in financial difficulty, we want to protect the remaining assets for recovery by employees seeking to make whole their ERISA retirement, health and welfare plans."
In the most egregious case of the 24 civil actions filed in the current enforcement action, the Department of Labor sued in a federal civil action Fathalla M. Marshall, owner and president of the now-defunct Northern Rhode Island Anesthesia Associates P.C. and its subsidiaries, for more than $6 million in employee contributions plus interest owed to the company`s pension plan.
The civil lawsuit filed in the U.S. District Court for the District of Massachusetts charges that Mashali diverted more than $6.6 million in employee contributions to the pension plan to a pension subsidiary Mashali controlled.
Borzi noted that 2010 was the first year the Department of Labor has set up within EBSA a criminal investigations unit to investigate and prosecute cases in which employers may have withheld employee contributions to retirement and health benefits with the intent to commit fraud.
The Department of Labor has issued 10 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) A significant drop in account balance that cannot be explained by normal market ups and downs;
5) 401(k) or individual account statement shows your contribution from your paycheck was not made;
6) 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) Unusual transactions, such as a loan to the employer, a corporate officer, or one of the plan trustees;
9) Frequent and unexplained changes in investment managers or consultants;
10) Your employer has recently experienced severe financial difficulty.
Employees concerned about their ERISA retirement plans should contact the Department of Labor hotline at 866-444-3272.
ABOUT THE AUTHOR: Jerome R. Corsi received a Ph.D. from Harvard University in political science in 1972. He is the author of the #1 New York Times bestselling books THE OBAMA NATION: LEFTIST POLITICS AND THE CULT OF PERSONALITY and the co-author of UNFIT FOR COMMAND: SWIFT BOAT VETERANS SPEAK OUT AGAINST JOHN KERRY. He is also the author of AMERICA FOR SALE, THE LATE GREAT U.S.A., and WHY ISRAEL CAN`T WAIT. Currently, Dr. Corsi is a Senior Managing Director in the Financial Services Group at Gilford Securities as well as a senior staff writer for WorldNetDaily.com.
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ABOUT RED ALERT: Jerome Corsi`s RED ALERT is your weekly, global financial strategies newsletter. Designed to be your guide to economic trends in the best of times and the worst of times, it is edited by New York Times best-selling author Jerome Corsi, Senior Managing Director of the Financial Services Group at Gilford Securities as well as a WND senior staff writer and columnist. For 25 years, Corsi worked with banks throughout the U.S. and the world developing financial services marketing companies to assist banks in establishing broker/dealers and insurance subsidiaries to provide financial planning products and services to their retail customers. Corsi developed three third-party financial services marketing firms that reached annual gross sales levels of $1 billion in annuities and equal volume in mutual funds. Corsi received his Ph.D. in political science from Harvard University in 1972.
By Dr. Jerome Corsi
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