How to Identify Retirement Plan Mismanagement
Issues with retirement plan management can significantly impact your long-term plans, future, and ability to retire on time. Identifying retirement plan errors early can help you take steps to protect your future.
Knowing what obligations employers and administrators have can help you recognize retirement plan issues, like incorrect contributions and distributions, administrative errors, fund mismanagement, and failure to provide required information.
At the Peace Law Firm, our ERISA lawyer protects employees from retirement plan mismanagement and ensures you can confidently plan for the future. With extensive experience handling legal issues related to retirement plans, we work to ensure that our clients receive the benefits they have earned. If you suspect mismanagement of your retirement funds, reach out to explore your options.
Employer and Plan Administrator Obligations
Employers and plan administrators have specific legal duties toward employees with retirement plans based on the Employee Retirement Income Security Act of 1974 (ERISA) and other federal laws. Those duties include:
- Acting in the best interest of plan participants and beneficiaries rather than the company;
- Ensuring proper and timely contributions;
- Providing disclosures about plan benefits, fees, and investment options, including periodic statements and summary plan descriptions;
- Making prudent investment decisions, avoiding excessive fees, and diversifying assets to minimize risk;
- Timely processing of distributions in compliance with tax and distribution rules; and
- Taking prompt action to correct issues, restore lost funds, and notify affected employees about what occurred.
Knowing what proper plan management is empowers you to recognize mismanagement.
Common Retirement Plan Errors
Signs of retirement plan errors include:
- Deductions from paychecks not matching employer records or expected contributions;
- Missing or misleading disclosures;
- High fees, overly risky investments, or improper fund allocation;
- Unjustified distribution delays or denials; and
- Use of plan assets for unauthorized purposes, such as covering company expenses.
Employees should regularly review their retirement statements and plan documents to identify potential mismanagement. Identifying patterns that suggest retirement plan issues can be difficult in isolation, so do not hesitate to contact an attorney with the experience needed to spot these issues early on.
How Mismanagement Impacts Employees
When retirement plan issues arise, employees may suffer serious financial consequences, such as:
- Loss of retirement savings, significantly reducing the amount available to employees upon retirement;
- Tax penalties and unexpected liabilities caused by incorrectly reported contributions or distributions;
- Reduced investment growth, resulting in lower returns and limiting the long-term growth of retirement savings; and
- Uncertainty in financial planning, disrupting employees’ ability to plan effectively for retirement.
Retirement plan issues can mean the difference between retiring comfortably and being forced to continue working beyond your intended retirement. As a result, plan mismanagement can throw off the best-laid of long-term plans if you do not catch it early.
Addressing Retirement Plan Issues
If you suspect mismanagement of your retirement plan, you have legal options to respond and potentially recover some of the funds that the mismanagement deprived you of. Generally, you need to attempt to resolve any issues you identify in a step-by-step process that involves:
- First, working through internal plan processes;
- Second, working through administrative government agencies; and
- Third, suing an employer or administrator.
Following the correct sequence is essential to recovering what you are owed.
Grievance Processes
Your plan may include specific steps you must take to raise issues, which should be identified in the documents you received about the plan. If you properly received these disclosures, contact your employer and work with them to contact your plan administrator and begin an investigation. If you did not receive these disclosures, you can still work with your employer to contact your administrator, but your rights may differ slightly.
Legal Remedies
Once you complete any plan-required processes, you can pursue legal avenues such as:
- Filing a complaint with the Employee Benefits Security Administration (EBSA), part of the federal Department of Labor (DOL), which enforces federal laws governing private-sector retirement plans and investigates claims of mismanagement;
- Pursuing legal action under ERISA to recover lost funds and hold responsible parties accountable;
- Suing to recover financial losses resulting from employer negligence or fiduciary violations; and
- Forcing plan corrections through legal intervention.
Which of these options you should pursue depends on the specific circumstances.
Protect Your Retirement Savings
If you believe your retirement plan has been mismanaged, Peace Law Firm is here to help. Our team understands ERISA and other laws governing retirement plans and is committed to protecting your financial future. Contact us today to discuss your concerns and explore your legal options.
Rate this Post
Loading...