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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