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scyncewicz

What To Do When You Notice Questionable Practices

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if anyone can provide some information, I would most certainly appreciate it. My wife has a 403-b plan, and several things are occurring:

 

* untimely depositing of her contributions

* lost shares (fractional shares disappearing)

* negative dividends

 

we've contacted the dept. of Labor, spoke with the VP of Finance at her company, and no one seems to care. We've been trying to get answers for four months.

 

anyone have any suggestions on what to do next?

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Guest Guest_Joel

If this is an ERISA plan you should make a formal complaint with the US Department of Labor.

 

Peace,

Joel

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Guest Daniel Clark

First, you might want to consider stopping contributions immediately. It always concerns me most when you get no help with basic questions. I'd hate to see you throwing good money into a scandalous situation. You can always start contributions again, but I'd make that contingent o getting to the bottom of basic questions.

 

There are several approaches that are worth considering, in addition to the DOL Complaint and VP of Finance. I'd suggest you start thinking about constructing a fact pattern & gathering evidence - just in case you need to take legal action.

 

Next thing I'd do is request a copy of the Plan's Summary Plan Description and Plan Document from the Plan Sponsor. You will need these sooner or later, or to know if they even exist. You think the Plan is 403(b) Plan, so you must have some basis for that. But you'd be amazed how many plans do not have documents, Summary Plan Descriptions, or any other documentation. Get whatever you can.

 

I would also suggest you formally communicate (in writing) with the VP of Finance or any other internal contact. You need to document when you have asked for information and what you have asked for.

 

The goverance of 403(b) Plans varries significantly from organization to organization, with some employers taking a completely "hands off" approach on one end of the spectrum to others taking a very paternalistic approach on the other. As a general rule, plans that involve only voluntary employee contributions will receive little attention from employers with much greater attention paid to those where the company makes a contrribution.

 

Next thing to do is find out how the plan is operated. Who administers contribution remittances, who maintains the participant records, what the investment choices are, names of all financial services organizations(insurance companies, banks, mutual fund companies, other), name of the plan's legal counsel. Has the plan filed tax returns? Has the plan ever been audited, who did it?

 

If the VP of Finance will not assist, maybe HR will. Try that too.

 

Also, if you can find any information about who has made decisions for the plan on anything, that would be helpful as that person or person(s) would be de-facto fiduciaries. As such, they are likely liable (in the event of potential problems) and therefore most likely to want to get to the bottom of things along with you. If the VP of Finance and/or HR is not helpful, you will need to go to the top of the organization, and beyond to the Board of Directors to get somebody's attention.

 

Late contribution remittances can be explained by sloppy procedures. Negative dividends and lost fractional shares sound like costs and administrative burden being passed to plan participants. This can be legitimate or problematic. But you need (and can expect) better accounting to see exactly what is going on.

 

I'd pursue these actions but if you are still not making any progress, you have little recourse other than a DOL complaint.

 

Good luck and post up whatever you find out or if you make any progress. By the way, the DOL has been known to shut down plans. I also understand that there are growing numbers of "orphaned" plans where sponsors have effectively walked away. Again, without information I would assume the worst case. As you obtain information, perhaps it will all add up.

 

Best Regards,

 

Dan

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Thanks Dan (and others who have replied).

 

Let me update you on where we stand. First, we tried to get information from the third party administrator, who told us to talk to the VP of Finance, who is the trustee of the 403-b plan. E-mails to him were ignored, so my wife and I finally met with him, and he seemed very uninterested in the whole thing. He asked for documentation (which I have LOTS of) so we provided that. He met with the third party administrator of the plan, and my wife has e-mailed him for an update, but he has ignored her e-mail. HR has done the same thing.

 

We did contact the DOL, but they didn't seem to care. They did call the VP of finance, but still didn't seem like they wanted to pursue anything, at least that's the impression we got.

 

as for the lost shares/negative dividends, we were first told by a rep. of the adminstrator of the plan that it was admin. fees we couldn't see, but then the HR director told my wife that she contacted the president of the administrator of the plan and that there are no admin. fees. It can't be sales fees, because shares have "disappeared" even when no purchases have been made.

 

They also charged a premium on one of the funds for about 7 months, but when we inquired about why, it all of a sudden went back to being the right price. We never got any explanation as to why the NAV price for purchased shares was higher than it should have been.

 

We've tried to contact the media, but they seem uninterested too.

 

I'm at a loss of what to do.

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Hi scyncewicz,

 

Sorry to hear about this situation. Time and time again we at 403(b)wise come back to the real source of 403(b) problems: the employers. If they would simpy take control of these plans and act in the best interest of their employees by offering reasonably priced products we could spend more time discussing asset allocation and retirement home shopping!

 

It may be a longs but try emailing Scott Burns at the Dallas Morning News. He has been very sympathetic in the past to spotlighting 403(b) abuses.

 

sburns@dallasnews.com

 

Good luck and please stay in touch.

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Hi scyncewicz,

I am too very sorry about this. Looks pretty serious when contributions "disappear." I have had contact with Mr. Caldwell on 403b legal matters. He is very sympathetic to 403b and teachers. His email:

G. Wade Caldwell gcaldwell@mdtlaw.com

Keep in touch,

Steve

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Guest Guest_Joel F

If this is an insurance company selling variable annuities make a formal complaint withe the State Insurance Commissioner as well as the National Association of Securities Dealers. If the issue involves just mutual funds file your formal complaint with the National Association of Securities Dealers.

 

How many employees are effected?

 

Peace,

Joel

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Guest Guest_Joel F

You may want to write your congressperson so as to light a fire under the ERISA people at the DoL.

 

Joel

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Guest the wise

This all sounds like a contribution processing error. It could be on the employers or plan sponsors side. No one cares because many employers back offices use pen and paper or old computer systems. No matter how much you complain the upgrade needed to simply fix this problem usually cost in the millions of dollars and most school districts (and teachers unions)would rather keep teachers working than spend money on a state of the art record keeping system.

 

These things usually fix themselves.

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Guest Guest_scyncewicz

It's a non-profit Hospice. It's not just a processing error I don't believe. If it were, I wouldn't be four months into it with no answers.

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Whatever state you are in, and if your wife is a state or school employee, contact the department of Insurance and report it under the Consumer affairs dept. If in a school.... call the district...

The company doesn't care, that's the problem with Custodial 403bs.... Tiaa-Cref knows all about it... they encourage the cusotdial accounts and dealing with brokerage houses......and with that you will have transaction issues from them, and since the brokerage houses really do not pursue 403b business, you must seek other help.

John Zip

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