It’s easier to steal when no one is looking.
In Ohio, a former plan participant is facing criminal charges for a fraudulent hardship request.
The participant submitted to the plan’s third-party administrator (TPA) two hardship withdrawal applications to obtain money from their 401(k) account. The first was made in June 2019 and the second in October of the same year. The applications stated the distributions would be used to purchase his primary residence and pay medical expenses. Prosecutors allege that the participants used the funds for other purposes, such as personal expenses, and falsely represented the purpose of the withdrawals on the applications. In addition, it’s alleged that the defendant forged a plan trustee’s signature on the applications.
As a plan sponsor, you’re a plan fiduciary, so it’s necessary to make sure that all hardship applications have substantiation for the valid reason for them and processes in place that no one presents a forged application to the TPA.
