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U.S. Department of Labor
Employee Benefits Security Administration
June 2004
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The Labor Department's Employee Benefits Security Administration (EBSA) is
committed to safeguarding employee contributions to 401(k) plans and health
care plans by investigating situations in which employers improperly delay
forwarding employee contributions to the appropriate funding vehicle or
simply convert the contributions to other non-plan uses. Either or both
scenarios may occur when the employer is having financial problems and turns
to the plan as a source of financing. In addition to following up on
participant complaints, EBSA is currently conducting a baseline study
designed to help assess the level of noncompliance with ERISA’s
requirements in this area. Results of this study should be available in mid
2005.
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Background
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About 70 percent of all workers who participate in
retirement plans are covered by a 401(k) plan, either as their only plan
or as a supplemental plan.
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The number of 401(k) plans has grown continually from
17,000 plans covering 7.5 million people in 1984 to more than 300,000
plans covering more than 42 million people, as of 2002.
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These plans have combined assets of about $1.8
trillion, as of 2003.
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The Labor Department’s national enforcement project
reduces misuse of contributions made by workers to their 401(k) plans.
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The initiative is multi-faceted, including: conducting
investigations into 401(k) misuse; implementing the Pension Payback
program, a voluntary compliance program for restoring contributions and
lost earnings to the plans; issuing a regulation to shorten the time for
transmitting contributions to a 401(k) plan; and launching an education
campaign to inform retirement plan participants about their rights and
ways to protect their pension.
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401(k) Enforcement Initiative Results
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For the first three quarters of fiscal year 2004,
975 investigations were closed – 788 with violations.
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The Labor Department had monetary results of
$22,129,798
nationwide during the first three quarters of the 2004 fiscal year under this
project.
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For fiscal year 2003, 1,384 total investigations were closed
– 1,165 with violations.
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401(k) Initiative Cumulative
Statistics
(as of 06/30/04) |
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Fiscal Year |
Civil Cases Closed |
Civil Cases Closed With Violations |
Criminal Cases Closed |
Criminal Prosecutions |
Monetary Results |
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1995* |
95 |
34 |
5 |
7 |
$1,320,308 |
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1996 |
458 |
146 |
8 |
14 |
$8,039,957 |
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1997 |
823 |
388 |
10 |
21 |
$28,176,814 |
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1998 |
824 |
461 |
30 |
16 |
$13,989,075 |
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1999 |
852 |
625 |
23 |
17 |
$19,366,568 |
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2000 |
1,025 |
840 |
27 |
21 |
$27,882,270 |
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2001 |
1,150 |
893 |
23 |
8 |
$28,828,131 |
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2002 |
1,317 |
1,045 |
20 |
15 |
$42,833,078 |
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2003 |
1,364 |
1,157 |
20 |
8 |
$135,528,157 |
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2004 |
975 |
788 |
14 |
9 |
$22,129,798 |
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Totals |
8,883 |
6,377 |
180 |
136 |
$328,094,156 |
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* First year to emphasize
401(k) abuse as a National Enforcement initiative. |
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Participant Contribution Regulation
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The Department’s participant
contribution regulation requires employers of all sizes to transmit
employee contributions to pension plans as soon as they can be
segregated, but in no case later than the 15th business day of the month
immediately following the month in which the contribution is either
withheld or received by the employer.
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Consumer Education
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The Department began a consumer education program
simultaneously with its enforcement effort on employee contributions.
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The “Top Ten Warning Signs” were published on EBSA’s
Web site to provide consumers with tips on indicators of potential
401(k) abuse.
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Several new publications were developed to assist
individuals in learning about their rights and monitoring the safety of
their pensions. Some of the more popular include What You Should Know
About Your Retirement Plan, Protect Your Pension -- A Quick Reference
Guide and A Look at 401(k) Plan Fees.
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All of these publications are available on EBSA’s Web
site at www.dol.gov/ebsa or through EBSA’s toll free number at
1.866.444.EBSA (3272).
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If you have questions not answered in this fact sheet,
contact EBSA through the toll-free number or electronically at
www.askebsa.dol.gov.
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This fact sheet has been developed by the U.S. Department of Labor, Employee
Benefits Security Administration, Washington, DC 20210. It will be made
available in alternate formats upon request: Voice phone: 202.693.8664;
TTY: 202.501.3911. In addition, the information in
this fact sheet constitutes a small entity compliance guide for purposes of
the Small Business Regulatory Enforcement Fairness Act of 1996.
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