On October 18, 2025, The Wall Street Journal (WSJ) published an article authored by Anne Tergesen titled “Missing 401(k) Funds Show a Hidden Risk.” The WSJ’s online version of the story was titled “Her 401(k) Contributions Vanished — and Her Company Had No Answers.”1 The two titles reflect a slightly different perspective on the same violation of the 401(k) plan sponsor’s fiduciary duty.
Were the deposits simply late, or delayed, or was this theft? Over the years we have seen many instances of delayed deposits, in particular by small business owners who need cash to meet obligations and decide to “borrow” the funds that are supposed to be deposited in employee accounts until they can “catch up.” The Department of Labor (DOL) requires businesses with more than 100 employees to make the deposits within two days; companies with fewer than 100 employees have two weeks. Delays were more frequent—and somewhat explainable—in the past when employers would write a check, staple it to a report, and send it off to the recordkeeper or third party administrator (TPA). Today, with ACH electronic fund transfers, the incidences are less frequent; the DOL limitation is generally achievable. As such, the agency has been clamping down on late deposits; over the last five years, the DOL has reportedly collected more than $2 billion in fines, which are used to fund the department that deals with retirement plan violations and enforcement. The fines have served to clean up a lot of sloppy practices and, for the most part, eliminated the delays.
As revealed in the WSJ article, the so-called missing funds were actually stolen. While the DOL and the business’s recordkeeper have been investigating the issue, they have been unable to locate the owner. The incident and resulting article humanize what it is to be a victim of theft of retirement plan contributions, the tragedy of entrusting your money to someone who uses it fraudulently.
The case of Amanda Otter illustrates how difficult it can be to recognize warning signs, even when you’re vigilant about your retirement savings. While there were red flags that might have indicated trouble, it’s important to understand that employees shouldn’t need to be financial experts to protect their own contributions. When you trust your employer and see money deducted from your paycheck, you naturally assume it’s being handled properly. That trust is both reasonable and necessary for the employment relationship to work. However, understanding what to look for—and when to seek help—can provide an important safety net for your retirement security.
Employees: Protect your retirement savings; watch for red flags
Retirement plans shouldn’t fail because employers have a fiduciary duty to use the money as intended to fund the employee benefit. If the employer had delayed funding the plan to make payroll, it might have been determined that he did not violate his fiduciary duty. But if he used it to pay creditors, or simply to line his own pockets, it would be a violation, and he would be personally liable. While you shouldn’t have to monitor your employer’s every move, there are warning signs, red flags, that can alert you to potential problems, including:
- Failing to make payroll, or making payroll late.
- Failing to pay vendors.
- Failure to quickly resolve errors when discovered.
- Failure to submit contributions to the plan, especially if it happens repeatedly.
- Only partial employee deferral contributions being submitted.
Such suspicious activities are signs of trouble that should lead you to act. Reach out to your TPA, recordkeeper, or plan advisor. It might be best to stop contributing and open your own personal IRA. If you notice these issues, consider alternative retirement savings options, at least until the situation is resolved.
As your balance gets bigger, greater vigilance is required. Look at your statements, ensure they reflect correct contribution amounts, and check to ensure the money is being invested properly.
What to Do If You Discover Missing Contributions
If you suspect your 401(k) contributions aren’t being deposited properly, take action immediately.
Document everything:
- Print or save copies of your pay stubs showing deductions.
- Download all available account statements.
- Note dates when you first noticed discrepancies.
- Keep records of any communications with your employer or HR department.
Contact the right people in this order:
- Your plan’s recordkeeper or TPA: They can verify whether contributions were received.
- Your HR department or plan administrator: Request a written explanation.
- The Department of Labor: File a complaint at www.dol.gov/agencies/ebsa if issues aren’t resolved quickly.
- A qualified attorney: Consider legal counsel if substantial funds are involved.
Know your timeline:
Act quickly. While investigating, consider temporarily suspending contributions and directing that money to an IRA or other retirement account you control directly.
Understand your protections.
Employees have legal protections under ERISA (Employee Retirement Income Security Act). Employers who misuse plan assets face serious penalties, and you may be entitled to restoration of your account with lost earnings. The DOL’s Employee Benefits Security Administration investigates these cases and works to recover missing funds.
Employers: Understand your fiduciary duty
As a business owner and plan sponsor, you have a fiduciary duty on behalf of your employees. If they entrust you with their savings, you must take it seriously and adhere to the regulations. You are personally liable for “prohibitive transactions,” that is, using plan assets to pay for anything other than the employee benefit. Even if an employer is given permission to use the funds otherwise, it is still a prohibitive transaction; the DOL can impose penalties, including a civil penalty of 5 percent of the amount involved up to 100 percent if the transaction is not corrected.
How HBKS Protects Your Plan and Your Employees
As a registered investment advisory firm, HBKS Wealth Advisors works with employers to develop and oversee all aspects of their plans. While our participation does not eliminate the plan sponsor’s fiduciary duty, we share that duty with our clients.
We help prevent problems like those highlighted above:
Proactive monitoring systems:
- Regular reconciliation of payroll deductions against plan deposits
- Automated alerts when contributions fall outside normal timing patterns
- Quarterly compliance reviews to catch issues before they become serious problems
Early warning detection:
- We review your plan’s financial health indicators
- Our team identifies red flags in plan operations during routine oversight
- We conduct annual plan audits for larger plans to ensure compliance
Clear communication channels:
- Employees have direct access to our team with questions about their accounts
- We provide educational resources so participants understand what to look for
- We facilitate resolution when discrepancies are discovered
Fiduciary protection for employers:
- We help you understand and document your fiduciary processes
- Our oversight demonstrates your commitment to proper plan management
- We provide guidance on handling cash flow challenges without compromising the plan
We’ve helped clients navigate everything from minor administrative delays to serious compliance concerns. Our goal is to catch and resolve issues at the earliest possible stage, protecting both the employer’s interests and the employees’ retirement security.
Vigilance required
Beyond internal considerations, employers need to be vigilant about fraud. As more dollars flow into retirement plans, the plans are more attractive targets for external as well as internal attacks. To help employers and employees better understand their duties, rights, and risks, HBKS conducts webinars on cybersecurity and plan sponsors’ fiduciary duties:
- Click here to register for our upcoming cybersecurity webinar, Thursday, October 30 at 10:00 a.m.
- Click here to register for our upcoming webinar addressing plan sponsors’ fiduciary duties, Monday, November 10 at 2:00 p.m.
We’re here to help. If you have questions, or for more information, contact me at 724-934-8200, or by email at rdiaz@hbkswealth.com.
¹ Tergesen, Anne. “Missing 401(k) Funds Show a Hidden Risk.” The Wall Street Journal, October 18, 2025
Important Disclosure:
The information included in this document is for general, informational purposes only. It does not contain any investment advice and does not address any individual facts and circumstances. As such, it cannot be relied on as providing any investment advice. If you would like investment advice regarding your specific facts and circumstances, please contact a qualified financial advisor.
HBKS Wealth Advisors is not a legal or accounting firm, and does not render legal, accounting or tax advice. You should contact an attorney or CPA if you wish to receive legal, accounting or tax advice.
The historical and current information as to rules, laws, guidelines, or benefits contained in this document is a summary of information obtained from or prepared by other sources. It has not been independently verified but was obtained from sources believed to be reliable. HBKS Wealth Advisors does not guarantee the accuracy of this information and does not assume liability for any errors in information obtained from or prepared by these other sources.
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