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Firms Credit $4.8 Million in Mishandled 401(k) Funds

September 28, 1996|From Reuters

Nearly 17,000 people had $4.8 million credited to their 401(k) retirement plans after employers made use of a grace period to replace funds they had failed to deposit properly, the government said Friday.

The Labor Department released data showing that 170 small to mid-size businesses voluntarily returned employee contributions and made good on lost earnings after they were given six months to do so without penalty.

The amnesty program, which expired earlier this month, was part of a broader Clinton administration effort to end fraudulent activity involving 401(k) plans. So far, the crackdown has resulted in investigations that have led to the return of $10 million more in employee funds.

As a result of the program and grace period, contributions were repaid to plans affecting 16,800 participants. Amounts ranged from $43 to more than $200,000, the department said. The employers, which included technology companies, law firms, physicians and credit unions, admitted to being delinquent for reasons ranging from computer errors to diverting funds to pay bills.

Amnesty was not available for those employers "who had engaged in the most egregious conduct," the department said. Firms were disqualified, for example, if they were under criminal investigation or if they had failed to make deposits exceeding the total amount of employee contributions for all of 1995.

The government launched its 401(k) enforcement program in 1995. A new federal rule requires employers to deposit money withheld from workers' checks for 401(k) plans within 15 days instead of 90 days.

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