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Sunday, February 2, 2014

Office of Circumlocution, 401(k) Edition

When a company declares bankruptcy, the 401(k) funds are supposed to be transferred promptly to the account holders. Gretchen Morgenson in The New York Times explores why this didn't happen to the employees of Penn Chemical Company, who for five years were denied access to their funds after its bankruptcy in 2008. In a particularly Dickensian twist, the plan's participants were charged $111,463 in fees for administering the plan during the time it should not have existed. It took the relentless efforts of one tenacious employee, along with a bankruptcy judge and entreaties to the Labor Department and the IRS, to get the money released.

Morgenson concludes:  "Americans increasingly must rely on 401(k) plans to support themselves when they have finished their working lives. You can’t help wondering: Is this any way to run a retirement system?" -- B.B.

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