Make Sure Your Employer Isn't Misusing 401(k) Money

"The two most common problems we have are late remittals or the failure to remit at all," says DOL spokesman Brad Mitchell. "We find this quite often when businesses are going through slow times and they need capital, and so they use the money (in employee retirement plans) that doesn't belong to them."

Look at the case of Duke's Body Shop in Crystal, Minn.

Sheila Bergen, who had responsibility for the Minneapolis auto body repair company's corporate account at the time, allegedly used employee contributions owed to the company's savings incentive match plan to pay for the company's operating expenses, the DOL said on Jan. 18.

The agency is suing to restore more than $25,000 in contributions owed to the plan and to remove Sheila Bergen as the plan's fiduciary.

Ms. Bergen, who has since become the owner of Duke's Body Shop, did not respond to a request for an interview.

There are other ways companies may be misusing 401(k) dollars, as well.

The DOL said on Feb. 26 that it has sued Knoxville College for an alleged $14,725 in employee contributions that were diverted from the participants' individual retirement savings plans. The school, which had been struggling financially for many years, also allegedly made additional mistakes, such as failing to maintain an adequate fidelity bond to protect participants from the risk that a fiduciary mishandles their assets.

Knoxville College declined to comment on this article.

What can you do to avoid becoming an unlucky 401(k) holder?

Industry experts advise that you do more than merely watch your account statement carefully to make sure that it always reflects the right amounts and that you authorized all the investments in it.

Red flags include 401(k) statements or benefits payments that consistently arrive late or at irregular times. And, you might want to ask questions if you hear about things like frequent changes in who manages your 401(k)'s investments, or bizarre money deals being struck between your employer and a plan trustee.

Should you need help to resolve such concerns, any consumer with a complaint or a question about a 401(k) plan can call the Employee Benefits Security Administration, or EBSA, at 866-444-3272.

You might also be able to find help from your local consumer watchdog associated with the Pension Rights Center.