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401(k) account error makes her paper millionaire, and she's fuming

Source: The Detroit News Publication date: 2000-06-08

Most workers would be thrilled to hear they had $4 million in their 401(k). But Kathi Steigerwald was appalled.

The Dearborn woman, who calls an automated telephone system almost daily to check her account balance, knew the amount should be in the mid-five-figure range.

Starting May 5, the computer voice began telling her she had more than $4 million.

Steigerwald kept phoning, and the amount went back to normal after a few days. But on May 12 it bumped back up to $3,872,300. It stayed that way until May 15 and has been stable ever since.

"I was a weekend millionaire," said Steigerwald, whose 401(k) represents the main retirement nest egg for herself and husband, Marv. "But it really isn't funny.

"They could make a mistake the other way, too. It isn't a ton of money to them but to me it's quite a bit."

What irked her the most was the lack of information from the provider of the 401(k), which is operated by Kemper Funds in Chicago.

A Kemper spokeswoman told The Detroit News that the company experienced a "glitch" with its automated voice response system, but that the record-keeping computer system was not affected.

In other words, a printed statement generated from the actual account database would have reflected the correct amount in Steigerwald's 401(k), even though the voice system was reading an incorrect balance.

Consumers should know that 401(k) plans are regulated by the Department of Labor's Pension & Welfare Benefits Administration agency. They are considered pension plans for regulatory purposes, even though they are funded primarily by employee contributions and are governed by the Employee Retirement Income Security Act.

Implied in the act is the responsibility of plan providers to ensure accurate account information, said Virginia Smith, director of enforcement for the pension group.

"The most common complaint we get is that there is not enough money in the account," she said. "This participant is actually doing the right thing in keeping a watch on her account.

"I'm not sure it's necessary to check every day. But you should monitor the accuracy of your account the same way you would balance your checkbook every month."

Most 401(k) or other defined contribution plan statements should reflect employee contributions in a column separate from earnings, employer contributions or other variables.

It's a good idea to routinely make sure your contribution amount matches the deduction shown on your pay stub, Smith said. Her office conducted 4,700 investigations nationwide last year, and the bulk were based on missing contributions.

Sometimes, paperwork inefficiency or computer problems were responsible, but fraud and embezzlement are not uncommon either, Smith said.

Workers unable to get a satisfactory explanation from their employer or plan provider should call a regional Pension & Welfare Benefits office for help. In Detroit, that number is (313) 226-7450.

The agency offers free booklets on the act, pension rights and warning signs of fraud at www.dol.gov/dol/ pwba or (800) 998-7542.

http://realcities.yellowbrix.com/pages/realcities/Story.nsp?story_id=11103980&site=charlotte&ID=realcities&scategory=Computers%3AY2K

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-- (Dee360Degree@aol.com), June 09, 2000