Reply #5: Here's an excerpt from the article (I prefer a little text with my links) [View All]

[swag]

Defined-contribution plans such as 401(k)s - in which employers and employees make contributions but which offer no guaranteed payouts - have skyrocketed in popularity. But worker protections are relatively weak. While the federal government requires a yearly, independent audit for retirement plans with at least 100 workers, that doesn't cover the vast majority of plans. According to the Labor Department's most recent statistics, 627,905 defined-contribution plans covered fewer than 100 workers and had no required audit in 1999. Only 55,195 such plans fell under the rule.

Employees often have little recourse. Traditional pension plans with fixed payments to retirees, known as defined-benefit plans, can be bailed out by the Pension Benefit Guaranty Corp. if they fail. There is no such safety net for defined-contribution plans.

Susana Longo, compliance officer at Atlanta investment-advisory firm Applied Financial Group, was indicted in January on federal charges of stealing $5.4 million in retirement savings from 220 workers at a car dealer, two medical practices and an audio-visual specialist. She acknowledged spending the money on two beach houses, a diamond ring, a 1,600-bottle wine collection and a Porsche 911, according to a lawsuit filed by the advisory firm.

The disappearing assets went undetected for four years. If one of the business owners hadn't read his plan's account statement, where he spotted two suspicious transactions, the fraud could have continued "until it fell under its own weight when people wanted their money out," says Katherine Addleman, the Securities and Exchange Commission's associate enforcement director in Atlanta.

Employees could face greater risks as new types of personal accounts spread. The Medicare prescription-drug law created health-savings accounts in 2003 for workers in high-deductible medical plans. Millions of workers already use flexible-spending accounts for glasses and other health needs typically not covered by insurance, and the percentage is rising, according to Hewitt Associates, a Lincolnshire, Ill., benefits administrator.