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Frequent Contributor

How to ruin your whole day.....

Just got this story in my e-mail basket I thought might be of interest to some with 401(l) accounts....

It seems that in September and October 2016, an unknown person or persons stole an employee of Estee Lauder's 401(k)  retirement savings by withdrawing a total of $99,000 in three separate unauthorized distributions from her account in the plan. The employee was notified by mail of the withdrawals made from her account. According to the complaint, between October 24, 2016, and January 2, 2017, the participant made at least 23 calls to the Customer Service Center regarding the unauthorized distributions. Ultimately, it informed her that it had completed its investigation, no money had been recovered, and her plan account would not be made whole for the losses. IOW, too bad.

The employee notified police and the FBI who began an investigation. The lawsuit for fiduciary breach seeks to restore the stolen funds plus investment returns.

It is the responsibility of each plan administrator to ensure the security of employee accounts, and it seems the fix here would have been relatively easy, such as requiring the plan holder to physically submit a signed request for withdrawal...particularly an in-service withdrawal.

BruceM

7 Replies
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Frequent Contributor

Re: How to ruin your whole day.....

That is terrible news.

FWIW, my experience with 3 401k/403b plans is that they either require paperwork or 3-way teleconferences involving the plan, plan beneficiary and a representative from the bank/fund where the money is going. In one case, the plan took almost 2 weeks to setup a bank link - it said that it had to test and verify link by itself before letting me know.

YBB
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Contributor ○○○

Re: How to ruin your whole day.....

I just cleaned out my 401k. The request had to clear the plan administrator by secure login, my old HR people and 3rd party administrator. Only a check for the funds could be mailed. Seems as though the process for that poor person was not secure enough. 

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Frequent Contributor

Re: How to ruin your whole day.....

Just a reminder that Fidelity has a Money Transfer Lockdown feature that adds security.  I have on all 3 of my accounts,  I imagine other brokerages have similar.  

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Contributor ○○○

Re: How to ruin your whole day.....


@PaulR888 wrote:

Just a reminder that Fidelity has a Money Transfer Lockdown feature that adds security.  I have on all 3 of my accounts,  I imagine other brokerages have similar.  


I also use the Money Transfer Lockdown feature for my Fidelity accounts. The increased security is worth the minor inconvenience when transferring funds. I wish Vanguard offered a similar account lockdown feature.

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Frequent Contributor

Re: How to ruin your whole day.....

My recollection is that when I took a lump sum distribution from my 401k plan I was requited to enter a cripto code I  was previously assigned by the plan administrator in order to commence the process of rolling over the assets to my IRA and taxable account. 

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Frequent Contributor

Re: How to ruin your whole day.....

Yes, I put our accounts on lock-down at Fido, although it continues to allow for on-line bill pay and we can still write checks on our brokerage core account. Has anyone undone the lock-down to enable on-line transfers? If so, what did Fido require and how long did it take?

BruceM

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Frequent Contributor

Re: How to ruin your whole day.....

Hi Bruce ...  You got me thinking and I went into my MTL and looked around.  Here is what I found:

Transactions protected
  • Outbound money transfers*

  • Transfers between Fidelity accounts

  • Transfer of Shares and Assets to another institution

  • Individual Withdrawals

Transactions not affected
  • Deposits or Transfers into your Fidelity accounts

  • Checkwriting and Direct Debit

  • Debit card/ATM transactions

  • Trading

  • Scheduled Required Minimum Distribution (RMD) or Personal Withdrawal Scheduled Plan

  • BillPay

*Previously scheduled electronic fund transfers from your account may still be processed.

 

I have never taken off MTL to do a protected transaction so I have no experience there.  

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