401K Distribution Error
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401K Distribution Error
A terminated employee was given a 401K payout distribution for the wrong amount (1,900 too much ). If the money can not be collected from the ex-employee, what happens? Does the 401K plan suffer the loss, or is the trustee responsible for reimbursing the 401k plan back for the 1,900?
Asked on May 17, 2009 under Business Law, California
Answers:
B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
Ordinarily, the trustee is responsible for mistakes like this. A retirement plan trustee, and, usually, anyone who is a trustee for any kind of fund, is under what the law calls a "fiduciary duty," which is a very strict level of personal responsibility.
401(k) plans are governed by the federal Employee Retirement Income Security Act, often abbreviated "ERISA." If you are affected by this mistake, you should talk to a local attorney who is familiar with ERISA. One place you can look for qualifed lawyers is our website, http://attorneypages.com
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