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Can a former employer withhold 401K

Jensen Beach, FL |

I was fired on 11/30/2010 and have been trying to get my 401k rolled over to my bank. However, my former emploer is avoiding all phone calls from my bank. Can I take action>

Attorney Answers 1


  1. You stated this a little strangely. 401k should be a trusteed qualified plan. It should be rolled over to another trusteed qualified plan. Don't know what "my bank" is. If its the trustee of the new 401k plan the old trustee (maybe your employer and maybe its another trustee in a trust company elsewhere). The money in your 401, where was it invested? Something is not right with the level of detail, OR you raise the spectre of some sort of embezzlement. Yikes!

    Lets see. Assuming that the employer was a qualified plan, it is governed by ERISA. ERISA has exclusive jurisdiction with an important exception. Section 514 of ERISA exempts the usurpation of STATE CRIMINAL LAW. Therefore, if you have embezzlement your Florida State law would still be applicable. I hope that you have enough papers to focus you inquiry on the employer (rather than some 3rd party administrator). If a police report is made and detectives investigate, then it will lead where it will lead. Maybe the money is embezzled. Only someone looking at the books and papers may be able to tell.

    Next, if there has been no embezzlement, you might want to look to ERISA section 502(a)(2) for a lawsuit brought on behalf of the plan. It will seem strange to you, but individual retirees have much less standing than the plan. This was done intentionally to reduce single shot lawsuits. You may want to look at how a derivatve lawsuit works in that the suit is actually brought on behalf of the plan against the employer for failure of the employer to operate the plan properly. Others who can bring suit under this provision includes participants, beneficiaries and the U.S. Secretary of Labor.

    In addition, ERISA has its own criminal statute ERISA section 501.

    ERISA 502 (g)(1) includes an attorney fee provision.

    A third party "bank" involvement is such that privacy considerations may cause the plan to ignore the bank as a possible identity theft matter. YOU need to get involved directly. YOU are the plan participant, not your bank.

    You have a lot of power with respect to your plan. YOU need to weild it. Get to the bottom of this without delay as you may also be losing money on your investments. You should call the employer. If you suspect embezzlement YOU should make a police report. If not satisfied YOU should hire a local Florida ERISA attorney. Don't rely on your bank alone. Get involved.

    I did not address the failure of duties of trust and the IRS consequences to the employer, but suffice it to say that if embezzlement or strong wrongdoing is involved, the employer will be in a world of pain.

    Curt Harrington Patent & Tax Law Attorney Certified Tax Specialist by the California Board of Legal Specialization PATENTAX.COM This communication is general information and not legal advice, and does not create an attorney-client relationship. This communication should not be relied upon as any type of legal advice. Please note that no attorney-client relationship exists between the sender and the recipient of this message in the absence of either (1) a signed fee contract and (2) remission of an agreed-upon retainer. Absent such an agreement and retainer, I am not engaged by you as an attorney, nor is any other member of my law firm.

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