Imagine logging onto your brokerage to check your 401(k)... except something is not quite right
It's down $50,000
Not because of market fluctuations... but because $50,000 has vanished into thin air.
That's exactly what happened to 54 year old Amanda Otter.
Her employer had deducted a couple of thousand dollars from her paycheck in early 2022 to put into her retirement account... but less than half that amount was transferred over.
A lot more cash would eventually vanish.
Otter embarked on a three-year hunt that laid bare just how difficult it can be for employees to recover missing 401(k) money.
So much for a set-and-forget retirement plan…
And it turns out Amanda isn't the only one suffering from this...
In fact there have been an average of 250 cases a year for the past decade.
Because here's the scary part...
If your company's retirement plan has less than 100 participants... it's immune from federal audits.
(I genuinely didn't know this... and assumed everything was audited)
In Amanda's case, it was likely that her 401(k) money was used by the company to pay back creditors after the company ran up more than $4m in bad debt.
But as the compay has now dissolved... she'll be fighting in court to get that money back. Money that was rightfully hers from day 1.
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In her own words
"It’s been this persistent sick feeling that has never really gone away"
So here's how to prevent this from ever happening to you...
First of all... skip the advice to only check your brokerage account 3-4 times a year.
You should be checking it every month at least... to ensure all contributions are being made correctly.
And second... you'll need something more than your 401(k)... something that YOU control.
Be that buy and hold stocks...
Or income generating strategies inside a Roth IRA... that you can rely on even after you stop working.
But whatever it is... don't leave everything up to someone else... even if that someone else if your employer
Oliver