Company Must Pay 401(k) Promptly
Q: My wife contributes to a 401(k) account, but learned recently that her employer had not transferred employees’ contributions to the trustee since August 1997.
When we asked the company president and the plan administrator for an explanation, they said there were some accounting problems that should be fixed soon.
Now, the company has filed a petition to reorganize under Chapter 11 of the Bankruptcy Code.
The company assures us that the money is safe. Should we trust the company or take some other steps to protect our savings?
--J.F., Westminster
A: I recommend that you immediately contact the local office of the Department of Labor at (818) 583-7862.
An employer’s failure to forward employee contributions to a retirement plan promptly is considered a serious matter. In general, if the employee contributions are not forwarded to the trustee before the company files its bankruptcy petition, those amounts can be used to satisfy the claims of the company’s creditors.
--Kirk F. Maldonado
Employee benefits attorney
Riordan & McKinzie
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