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An employee whited out the date next to her signature and the plan sponsor’s signature on a distribution form.  The plan sponsor’s signature was not accurate because this plan sponsor left.  This alerted the investment company who alert the plan sponsor.  The employee did not know there was anything wrong with this.  She was doing it for convenience. She thought that if there was something wrong with this then the investment company would say something.  The employe was fired.  The employee said that she was falsifying a document and she committed fraud.  When the employee challenged these allegations the employer then said it was not them who were alleging fraud but the investment company.  The investment company is denying that they alleged fraud.  They said that the only alerted the employer that the plan sponsor’s signature was not on their approved list so should they proceed with the withdrawal.  The employer said no.  The investment company said they are strictly record keepers.  Did this employee break any laws, rules, or regulations?

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Lawyer time! 

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There was no fraud. If the form was incorrect, the employee was merely trying to correct it. The record keeper should have rejected it and sent the employee another form with the correct information for the requested distribution. I find it hard to believe that the employer terminated her for this reason. If there is something I'm missing in the facts, let me know. On the employment side, an employer can normally fire someone with or without a reason and unless the reason violates federal or state law. This does not sound like an ERISA 510 violation.

 

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What a sticky situation. I would think it's up to the employer to prove fraud per their Employee Handbook and/or business ethics policy, especially since they fired the employee for the act. To me this feels more like an HR situation and less like an ERISA/plan situation.  "this" being the determination of fraud. 

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16 hours ago, Terry Connerton said:

There was no fraud. If the form was incorrect, the employee was merely trying to correct it. The record keeper should have rejected it and sent the employee another form with the correct information for the requested distribution. I find it hard to believe that the employer terminated her for this reason. If there is something I'm missing in the facts, let me know. On the employment side, an employer can normally fire someone with or without a reason and unless the reason violates federal or state law. This does not sound like an ERISA 510 violation.

As I read it the employee took a previously signed form, signed by someone who is not even with the company, and tried to use that to process a distribution.  If that's not fraud I don't know what is.  The original poster put kind of an innocent spin on it, but it sounds pretty serious to me.  I guess I'd want to know - was this a distribution for the employee personally?  Makes it worse, although still not ok if otherwise.

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