Spurred by more electronic record keeping, and a greater illegal demand for personal information,
identity theft is a crime that is sweeping the nation, wreaking havoc in its wake. According to the Federal
Trade Commission’s 2005 Identity Theft Report, in 2004 alone, there were over 635,000 reports of
identity theft, resulting in losses and damage of over $547 million dollars.

A growing form of identity theft affects assets contained in employer
contribution retirement plans, such as 401(k)s. Led by identity thieves and
dishonest employees, 401k asset theft has increased dramatically in the last
decade.

While it may not seem like a plausible or even possible scenario, the fact is, it
happens more often than most people would like to believe. According to the
Wall Street Journal, incidences of retirement plan asset theft have increased
dramatically. In 1995, only 34 cases of retirement plan theft were found in one
year. That number grew to 1,269 cases of missing money in the fiscal year
2004.1

In Atlanta, a woman was indicted recently for allegedly stealing over $5.4 million
in 401(k) contributions, which she used to purchase expensive wines, two
homes, and a Porsche 911.

So why the increased thievery of late? The increase can be largely attributed to
the growing number of workers who make contributions to 401(k) plans. Just
like identity theft, with more electronic records and increased technology use,
the risk rises. The ever-growing number of accounts, combined with record
contributions to them, means more chance for dishonesty and fraud.

The only way to combat 401(k) theft is to be prepared. You can do this by taking
a few simple steps:

Work with a financial professional to keep a watchful eye on your 401(k)
statements – It may not seem vital when you receive them, but careful
observation can usually help you catch abnormalities right away. Make
sure the right amount of money is making it into your account. You should
also check your account online as much as possible, or request to
receive account summaries more often to review with a financial
professional.

Keep an eye on your employer and your plan administrator – most 401(k) theft takes place when
companies are in poor financial shape. Watch for drops in your account total, especially ones not
related to the stock market’s performance.

Consider rolling over your 401(k) into an IRA as soon as you retire – In several cases of 401(k)
theft, employees of companies that had been stealing, had their accounts frozen even though their
assets had been un-touched. Now the retirees are stuck without their hard earned savings until the
legal system sorts everything out and the insurance company makes a decision on the effected
accounts (which could take months or even years).

401(k) theft can reach the lives of even the most un-suspecting account holder, but there are certain
steps you can take to shield yourself from financial disaster and in the process, attempt to lessen the
loss, or catch it immediately. A watchful eye is by far the best defense to help you protect your nest egg.


1-Kelly Greene, ”A New Retirement Concern: 401(k) Theft is on the Rise,” The Wall Street Journal, March 8, 2005

This article was submitted by Robert Valentine of Financial and Retirement Management.Robert Valentine is a well-known expert in the matters concerning investors. His articles on financial planning matters that concern investors have been published by several publications throughout the United States.