Benefit Insights | Automatic Enrollment Is On The Rise Spring 2019 | Page 3

A NON-TECHNICAL REVIEW OF QUALIFIED RETIREMENT PLAN LEGISLATIVE AND ADMINISTRATIVE ISSUES
unauthorized individual(s) had been fraudulently using this
process to obtain access to funds held in retirement accounts.
Upon obtaining access, the funds were able to be transferred
from those retirement accounts to other bank accounts without
the knowledge or consent of the actual participant. The FBI
indicated that Great-West wasn’t the only recordkeeper that was
PROTECT YOUR 401(K)
targeted by fraud schemes. In the end, Great-West reimbursed
all funds to the participant’s account.
THOUGH SOME EMPLOYERS MAY NOT THINK SO, THE TRUTH Please note, in this instance, neither the TPA nor Great-West
IS THAT IN TODAY’S WORLD 401(K) PLANS ARE SUBJECT TO had experienced a data breach. The participant’s personally
FRAUDULENT ACTIVITY AND THAT THE OFTEN-OVERLOOKED identifiable information (PII) was obtained by other means prior
RETIREMENT PLAN CAN BE THE PERFECT PLACE FOR IT
TO OCCUR. For example, in late 2017, several news outlets
reported a scheme targeting individual 401(k) accounts. The
U.S. Attorney’s office in Colorado had filed a lawsuit to recover
up to $2 million in losses due to fraudulent distributions from
retirement plan accounts. The lawsuit, filed December 4th,
2017 in federal court, sought to seize up to $342,335 in assets
from five individuals that deposited funds from the alleged
scheme. Multiple banks, including JP Morgan Chase Bank, Bank
of America, PNC Bank, and Wells Fargo, received the fraudulent
transactions. According to the suit, the FBI’s Denver Division
was contacted in November 2016 by Great-West Financials’ VP
of Internal Audit regarding allegations of fraudulent transfers
from clients’ 401(k) accounts by JP Morgan. At that time,
Upcoming Compliance Deadlines
for Calendar-Year Plans (12 / 31)
15 th
May 2019
Deadline for participant-directed plans to supply
participants with the quarterly benefit/disclosure statement
including a statement of plan fees and expenses charged to
individual plan accounts during the first quarter of this year.
1 st
July 2019
EACA ADP/ACP Corrective Testing – ADP/ACP refunds are
due to highly compensated employees (HCEs) to avoid a 10%
excise tax on the employer for plans that have elected to
participate in an Eligible Automatic Enrollment
Arrangement. Note: Deadline is normally June 30, which this
year falls on a Sunday.
Great-West Financial had 20 participants affected with a loss of 15 th
at least $1 million and a potential loss in excess of $2 million. Defined Benefit Contributions – Deadline for Defined
Benefit Plans to make the second quarter contribution.
As in many 401(k) plans, participant victims of the fraud 29 th
established an account online with the plan’s recordkeeper
(in this case Great-West). Great-West maintains a call center
to assist with questions when contacted by a plan participant,
utilizing a four-part authentication process that employs
biographical identifiers set up by the plan participant. Using this
biographical information (e.g. name, Social Security numbers,
or date of birth) obtained through phishing scams and
password hacking, the scammers were able to provide accurate
information to change the online profile and ultimately affect
a distribution. According to the suit, Great-West observed that
BENEFIT INSIGHTS NEWSLETTER
Summary of Material Modifications (SMM) - A SMM is due
to participants no later than 210 days after the end of the
plan year if a plan change or amendment was adopted in that
year.
31 st
Due date for calendar-year plans for the filing of Form 5500
(Annual Return Report of Employee Benefit Plan), Form 5558
(Application for Extension of Time to File Certain Employee
Plan Returns), Form 5330 (Return of Excise Taxes Related to
Employee Benefit Plans), and Form 8955-SSA (Annual
Registration Statement Identifying Separated Participants
With Deferred Vested Benefits).
SPRING 2019