401K Money gone!?!

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ofcmetz
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401K Money gone!?!

Post by ofcmetz »

Once a week we log into all our investment accounts and update our portfolio spreadsheet. Today when we log in there is no balance in my wife's 401K account. She then calls the provider and they told her that all the money had been removed and sent to another provider as her company did not renew their contract. All they did was give her was the name of someone from her company to contact. Well, as its the weekend, the only person she can get in touch with is her out of state boss who has no idea what is going on with the 401K. It is likely that we won't know anything until her HR opens on Monday.

Since nothing was ever sent out to employees about this we are completely in the dark. As a police officer, I'm wondering how easy it would be to actually clean out someone's 401K accounts and steal the money. I'm sure that is probably not the case here, but when close to $100,000 is unaccounted for it does make one wonder. Is there any kind of protection in the case of a fraud like this? Would it even be possible to pose as an HR person and steal the employees 401K money?
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chaz
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Re: 401K Money gone!?!

Post by chaz »

I hope the HR person will have a good answer for you on Monday.
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ofcmetz
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Re: 401K Money gone!?!

Post by ofcmetz »

chaz wrote:I hope the HR person will have a good answer for you on Monday.
After spending about 30 minutes on the phone with the old provider, my wife was given the name of the location where all the money was sent. Apparently the contract with the current provider expired at the end of April. Everyone at the old provider agreed that her HR should have told the employees something prior to this happening. She's been at this company for 10 years and they have treated her great in every way besides this current mystery.

PNC National Bank is the location that the money was sent too according to the current provider. We had the money invested in two Vanguard Index funds, and I now wonder assuming it's legit what our investment options will even be. :annoyed
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Boglenaut
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Re: 401K Money gone!?!

Post by Boglenaut »

Wow, talk about leaving the employees in the dark. hmmm,maybe they thought no one would notice or care!?
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Re: 401K Money gone!?!

Post by nisiprius »

This sort of thing seems to be fairly common. In my case, though, it worked in my favor. I left a job, transferred my 401(k) to a rollover IRA custodian-to-custodian. Six years later, I was contact by a financial firm I'd never heard of. It seems that the last month's contribution hadn't been included in the original transfer, it had just been sitting there for six years, and nobody did anything about it until they changed to a different 401(k) management firm that wanted to clean up all the small nuisance accounts. One month's 401(k) contribution is hardly a fortune, but it is kind of disturbing to realize how easy it would have been to lose it. If you want to call it my own carelessness, I won't argue.

I'd add that when moving accounts from one broker to another, it can be unnerving to watch the process online day by day. What you see on the screen is not necessarily as instantaneous in real time as you might imagine. There are instants when you seem to see the same money in two accounts at the same time (Yay!) and other times when it seems to have vanished during the cyber-hyperspace jump between accounts (Yikes!)
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Watty
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Re: 401K Money gone!?!

Post by Watty »

If you have moved or gotten new email addressed then notification could have been sent by snail mail or email and you might not have gotten it. Or it could have gotten lost in the mail. Also check your spam folder if you normally hear from them by email.
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Re: 401K Money gone!?!

Post by ofcmetz »

Watty wrote:If you have moved or gotten new email addressed then notification could have been sent by snail mail or email and you might not have gotten it. Or it could have gotten lost in the mail. Also check your spam folder if you normally hear from them by email.

My wife sent an after hours email and just got it returned. It confirms that yes they are switching providers. It also said that something was supposed to have been mailed out but wasn't. Management says that something should be sent out soon. So as of now, the small worry about whether the money was stolen through some type of fraud is gone. The questions now are:

1. What are the new investments going to be?

2. What are the fees changing too?

3. And why in the world was nothing sent out prior to this happening. :annoyed

A significant portion of our US equity investments were in her 401K invested in the Vanguard 500 index and the Vanguard small cap index. Now we will have to wait and see.
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Re: 401K Money gone!?!

Post by ofcmetz »

Boglenaut wrote:Wow, talk about leaving the employees in the dark. hmmm,maybe they thought no one would notice or care!?

Her immediate boss who works in another state said, "You check your 401K online. I've never done that in 12 years. Why would you want to do that when they send out statements every quarter?". It is very possible as the accounts were emptied on the first that no one else in her 400 employee company has noticed.

BTW she is a nurse and works for an out of state company that provides services around the country.
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Re: 401K Money gone!?!

Post by mhalley »

Sounds like your 401k is about to get much more expensive. PNC seems to have an interest in Blackrock, so perhaps that is what your new funds will be. Certainly a huge pr snafu to not tell the employees about such a move. I wonder it it violates any sec rules?
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Re: 401K Money gone!?!

Post by ofcmetz »

mhalley wrote:Sounds like your 401k is about to get much more expensive. PNC seems to have an interest in Blackrock, so perhaps that is what your new funds will be. Certainly a huge pr snafu to not tell the employees about such a move. I wonder it it violates any sec rules?
Mike

My 457B has Blackrock index funds that have 0.05% ER's. Her old provider charged 0.79% on top of the funds underlying expenses. So if it's worse than that it will be pretty expensive. Fingers are crossed.
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Re: 401K Money gone!?!

Post by mhalley »

Glad to hear blackrock has some index funds, didn't know about the additional fees on top of the er, so this may work out better. Good luck!.
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Re: 401K Money gone!?!

Post by Professor Emeritus »

ofcmetz wrote:Once a week we log into all our investment accounts and update our portfolio spreadsheet. Today when we log in there is no balance in my wife's 401K account. She then calls the provider and they told her that all the money had been removed and sent to another provider as her company did not renew their contract. All they did was give her was the name of someone from her company to contact. Well, as its the weekend, the only person she can get in touch with is her out of state boss who has no idea what is going on with the 401K. It is likely that we won't know anything until her HR opens on Monday.

Since nothing was ever sent out to employees about this we are completely in the dark. As a police officer, I'm wondering how easy it would be to actually clean out someone's 401K accounts and steal the money. I'm sure that is probably not the case here, but when close to $100,000 is unaccounted for it does make one wonder. Is there any kind of protection in the case of a fraud like this? Would it even be possible to pose as an HR person and steal the employees 401K money?
Who is the plan's fiduciary?
AS DOL writes the fiduciary is fully responsible

What are the responsibilities of a fiduciary?

Fiduciaries have important responsibilities and are subject to standards of conduct because they act on behalf of participants in a retirement plan and their beneficiaries. These responsibilities include:

Acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them;
Carrying out their duties prudently;
Following the plan documents (unless inconsistent with ERISA);
Diversifying plan investments; and
Paying only reasonable plan expenses.

The duty to act prudently is one of a fiduciary's central responsibilities under ERISA. It requires expertise in a variety of areas, such as investments. Lacking that expertise, a fiduciary will want to hire someone with that professional knowledge to carry out the investment and other functions. Prudence focuses on the process for making fiduciary decisions. Therefore, it is wise to document decisions and the basis for those decisions. For instance, in hiring any plan service provider, a fiduciary may want to survey a number of potential providers, asking for the same information and providing the same requirements. By doing so, a fiduciary can document the process and make a meaningful comparison and selection.
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Re: 401K Money gone!?!

Post by JamesSFO »

Wow, that's pretty bad if there ends up being a black out period that would I believe violate ERISA rules from the Dept of Labor (DOL).
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Re: 401K Money gone!?!

Post by peppers »

If I may,

I had this experience of changing plan providers when one very large whale swallowed another large whale. Think Ma and one of the offspring.
We were informed prior to the transition that there would be a 6 week blackout window. Only contributions were allowed during the time frame; no exchanges, loans, distributions etc. When the transition was completed, it was important to check that all of the sub accounts were properly recorded. This involved pre-1987 basis and post-1986 basis contributions and earnings. I am sure you have kept all of your previous plan statements. Things have a tendency to fall through the cracks.
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ofcmetz
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Re: 401K Money gone!?!

Post by ofcmetz »

Thanks for the replies so far.

Should I assume the money will not be in the stock market anymore for a while because of this? When investments are changed within the 401K they are usually mapped into similar investments during a certain day. Is that the same when 401K's change providers. I'm really curious as to how long it takes for the company to provide us with any information.
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123
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Re: 401K Money gone!?!

Post by 123 »

My experience with one of these 401K transfers is that the funds from the old custodian were mapped to similar funds at the new custodian. However, there was a period of at least two weeks where funds were in limbo, not at either place and consequently not invested. YMMV.
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Re: 401K Money gone!?!

Post by LordB »

ofcmetz wrote:Thanks for the replies so far.

Should I assume the money will not be in the stock market anymore for a while because of this? When investments are changed within the 401K they are usually mapped into similar investments during a certain day. Is that the same when 401K's change providers. I'm really curious as to how long it takes for the company to provide us with any information.
There was a blackout at my place for about 2 weeks. The blackout usually lasts much longer than you are out of the market. My work claimed that there was no time out of the market (unlike what someone else posted) though I didn't do the math to confirm that was true. That said your funds will get "mapped" and the mapping can be very loose so your accounts may no longer be balanced the way you want them so you will want to fix that asap after the blackout. In my case I was in a "growth fund" (the growth part mainly meaning a higher fee for a managed fund) that was mostly large cap funds and all USA. After the mapping I was in a growth mixed cap fund that was a mix of foreign/usa. So I had to switch it to a large cap all USA index fund (and cut my fees by 30%).

Honestly your work screwed up majorly not notifying you about this beforehand. You should have had at least a few weeks notice before the blackout in case you needed to take actions before hand and you probably should already know what the mapping is and have preliminary info about when you can log in and make changes etc.
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Re: 401K Money gone!?!

Post by beyou »

mhalley wrote:Glad to hear blackrock has some index funds, didn't know about the additional fees on top of the er, so this may work out better. Good luck!.
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Re: 401K Money gone!?!

Post by dbr »

That's just astonishing. But put it up to total cluelessness on the part of the management of this organization, especially the attitude of her manager.

There is an old saying not to ascribe to maliciousness that which can be explained by incompetence, but there are instances of incompetence in some areas that constitute maliciousness. How does this organization treat people in other ways of concern?
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Re: 401K Money gone!?!

Post by Watty »

dbr wrote:That's just astonishing. But put it up to total cluelessness on the part of the management of this organization, especially the attitude of her manager.

There is an old saying not to ascribe to maliciousness that which can be explained by incompetence, but there are instances of incompetence in some areas that constitute maliciousness. How does this organization treat people in other ways of concern?

They screwed up big time but it sounds like it will get straightened out over the next few months.

One thing to watch out for though is that if you press them too hard about their actions then they might get scared when they realize that screwing up their fiduciary responsibilities could cost them big time.

They could decide that having the 401k is not worth the risk and discontinue it or hand it over to some very expensive company that promises(often incorrectly) to take all the risk of managing the 401k.
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Re: 401K Money gone!?!

Post by ofcmetz »

dbr wrote:That's just astonishing. But put it up to total cluelessness on the part of the management of this organization, especially the attitude of her manager.

There is an old saying not to ascribe to maliciousness that which can be explained by incompetence, but there are instances of incompetence in some areas that constitute maliciousness. How does this organization treat people in other ways of concern?
They have treated her very very well as far as pay and working conditions. It's been a great company to work for other than this lapse. She said the HR is not quite where it should be. I'm hoping she can get some answers tomorrow.
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Re: 401K Money gone!?!

Post by dbr »

ofcmetz wrote:
dbr wrote:That's just astonishing. But put it up to total cluelessness on the part of the management of this organization, especially the attitude of her manager.

There is an old saying not to ascribe to maliciousness that which can be explained by incompetence, but there are instances of incompetence in some areas that constitute maliciousness. How does this organization treat people in other ways of concern?
They have treated her very very well as far as pay and working conditions. It's been a great company to work for other than this lapse. She said the HR is not quite where it should be. I'm hoping she can get some answers tomorrow.
I sure hope she has the health and other benefits she thinks she has.

I retired from a pretty responsible megacorp type place that is and has been well regarded for treatment of employees. At the time they could not explain exactly what the terms of the retiree medical insurance plan were or weren't. The explanation was that the company lawyers and the insurance company lawyers were embroiled in an extended disagreement about some obscure terms and would not allow anyone to publish a statement of benefits until everyone agreed. I just gave up and opted for commercial Medigap. It was a good thing because they eventually terminated retiree health coverage altogether and replaced it with a health care reimbursement account for retirees.
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Re: 401K Money gone!?!

Post by lululu »

Certainly incompetence on someone's part. 400 is not a very large company, maybe they don't have anyone competent in HR to handle benefit finances.

When I was working for a company that was going down the tubes (It doesn't sound like yours is), they eventually laid off everyone in HR who knew how to do anything.
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Re: 401K Money gone!?!

Post by James2 »

In my larger 4,000 plus company, we are about to do a provider change. The letter I got said that the blackout period was just over 3 weeks. Makes me a little nervous but we will see how it goes. I will of course be taking account snapshots before and after the blackout.

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Re: 401K Money gone!?!

Post by LadyGeek »

The wiki has info on Blackrock: Blackrock iShares
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Re: 401K Money gone!?!

Post by grabiner »

The same thing happened to me, years ago. I had a Vanguard 403(b) with a former employer. I checked my Vanguard investments regularly, and suddenly, the fund was missing. I contacted Vanguard, which said that the plan had switched from Vanguard to Fidelity; neither Vanguard nor the employer contacted me in advance. My Vanguard fund (Windsor) was switched to the most similar Fidelity fund (Fidelity Value).

Soon afterwards, I rolled the 403(b) into an IRA to get the money back to Vanguard (and incidentally, to convert it to a Roth IRA).
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Re: 401K Money gone!?!

Post by ofcmetz »

Well, her company posted something on their website today. They claim the new company mailed out letters a month ago, but none of the four other people she works with received anything. Looks like the blackout period is between April 23 and May 18. Funds are supposed to be always invested in whatever they were invested in before. New 401K company is going to have the exact funds as the old one. What remains to be seen is what the fees will be.

Thanks again for all the helpful comments.
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Re: 401K Money gone!?!

Post by Hug401k »

Wow, I actually used to do these 401k conversions to new record keepers, though for much larger companies. The HR or the new record keeper should have sent something out (and you usually get emails these days too). If that had been me, I probably would have been fired, it's against all the regs not to have the communications go out. Never once did I miss communications from going out in a timely manner.

In any case, black outs are just so they can get a clean image of the plan, the participants and the accounts and send it to the new record keeper. They need everyone to stop moving their money around so they an get a clean file. They usually find quite a bit of "messes" to clean up as well..anything from bad DOB to people using bad SSNs..The assets (at my place) were liquidated and purchased immediately into the new funds. If the same funds were being kept, you weren't out of the market at all. There would just be a couple of days where we knew the TOTALS of what the plan owned and it would be invested, but not who owned it until we got the file from the old record keeper. Black outs are totally normal and they have managed to shorten them significantly over the years.

At my company, these things usually went pretty smoothly. We had a lot of auditing in place.

You SHOULD also get a notice when the accounts open back up at the new provider. (still shocked you didn't get a black out notice). Good luck
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Re: 401K Money gone!?!

Post by Mike83 »

I am surprised this happened to a current employee. I have admin'ed a small business plan for 25 yrs. We have changed 401k vendors 3-times for very good improvement in plans and expenses. Each time, we have deployed an extensive communication plan with current and past employees. Every time, a former employee, most recently one who quit 15 yrs ago, calls in a panic three months after the fact to ask where their account has gone. No good deed goes unpunished.
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Re: 401K Money gone!?!

Post by jlawrence01 »

Mike83 wrote:I am surprised this happened to a current employee. I have admin'ed a small business plan for 25 yrs. We have changed 401k vendors 3-times for very good improvement in plans and expenses. Each time, we have deployed an extensive communication plan with current and past employees. Every time, a former employee, most recently one who quit 15 yrs ago, calls in a panic three months after the fact to ask where their account has gone. No good deed goes unpunished.

A strong argument for rolling your 401(k) funds immediately into a Rollover IRA upon termination.

Do you realize how difficult it is to get a hold of an HR Manager or to get a call returned in many companies these days?
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