What is 401k Mismanagement?

If you are a California resident who works for a company of 500 or more employees and contributes money to a 401k or other retirement plan, you may have been subject to 401k mismanagement.

What is 401k Mismanagement?

Every year, Americans pay an estimated 30 to 60 billion dollars in fees to 401k plan administrators. Some consumers may be paying as much as 2 percent of the balance of their 401k every year. While some of these fees may be legitimate, some may indicate that your plan administrators are mishandling your money.

401k mismanagement is the mishandling of investment funds by the people or entity responsible for the plans. This may occur through negligence, or through active conflicts of interest and purposeful mishandling.

Negligent mismanagement may occur when plan administrators fail to ensure that their clients are enrolled in the best plans for their needs. Enrolling participants in plans with poor investment options and high fees may be evidence of possible mismanagement or negligence.

401k mismanagement may also occur due to intentional misconduct, such as when plan administrators attempt to make money for themselves at the expense of their clients.

Administrators who have inappropriately managed 401k accounts may have committed violations of ERISA, or the Employee Retirement Income Security Act of 1974.

What is the Employee Retirement Income Security Act of 1974?

ERISA is a federal law that requires administrators of pension and retirement plans to adhere to regulations and minimum standards. ERISA also requires plan administrators or employers to keep track of plan fees and expenses, as well as documenting and analyzing those fees.

Violating these requirements may result in penalties for the administrators, as well as the employer. Types of violations may include breach of fiduciary duty, excessive fees, failure to adequately fund, or providing clients with misleading information.

Who May Be Affected?

California residents who work at fairly large companies (500 or more employees) who participate in an employer-sponsored retirement plan may have had their money mismanaged by their plan administrators.

Many employees who are the victims of 401k fraud or mismanagement never realize that they have been taken advantage of financially. As 401k losses may occur due to other, non-fraudulent reasons, many victims assume that any significant losses are the result of a bad economy.

Employees who are concerned that their 401k plans may have been mismanaged can ask their plan providers to provide documentation proving that their plan is compliant with the Department of Labor’s Best Practice Standards. Companies that handle 401k and pension plans are required to share information about these plans with their clients.

If you suspect or have evidence that your 401k plan may have been subject to mismanagement by your plan’s administrators, you may qualify to hire an attorney and file a lawsuit to pursue compensation. Previous class action lawsuits regarding money mismanagement have resulted in settlements and payouts of millions of dollars.

Join a Free California 401k Class Action Lawsuit Investigation

You may qualify for this 401k class action lawsuit investigation under the following circumstances:

• You live in California;
• You are employed by a company with 500 or more employees;
• You participate in a 401k plan or another pension plan; and/or
• You have been the victim of an ERISA violation such as excessive fees, mismanagement, breach of fiduciary duty, and/or failure to adequately fund.

If you are unsure if you’ve been the victim of any 401k violations, an experienced retirement plan attorney can assist you.

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This article is not legal advice. It is presented
for informational purposes only.