Q: Last year I lost my total 401 (K) – 114,000 US dollars after Paychex sent me physical rollover checks instead of carrying out a safe transmission. The checks were intercepted and fraudulently redeemed.
I am now in front of a federal court and I am trying to hold salaries to account, but this experience has made painfully clear how little protection for consumers is available in situations like mine. For some reason, this outdated and uncertain method remains the standard practice in the retirement industry.
– Dylan Handy, New York City
This is a story about fraud, responsibility and process. Let's take them in order.
First comes fraud. The Interceptor and the Casher, to the Mr. Handy, is a thief that is still at large.
In 2023, Mr. Handy changed the job and tried to move his 401 (K) money from his old job plan to his new one. Paychex, which contributed to managing his old plan, arranged that he received two checks by post – one for his 401 (K) and one for a red version. Then he should send the checks to his new plan administrator with a rollover form. He did that, he thought.
In fact, a thief somehow took the checks. This thief (or these thieves) took a check to the Citizens Bank and another to follow it and successfully collect or deposit it.
That was the fraud. Who took responsibility? Not Paychex, not yet.
According to Mr. Handy, Paychex needed months to carry out an examination that did not lead anywhere. He finally went to the citizens who arrange a reimbursement of the approximately 14,000 US dollars in his Roth 401 (K). However, Chase did not help him and instructed him to the Paychex bank. PNC also did not help what Mr. Handy understood as a Bankschex bank.
Last year, Mr. Handy Paychex sued. Why Paychex?
“Salary is the company that wrote the check, so salary must be the one who will get the money back,” said Jonathan Corbett, lawyer of Mr. Handy.
It is not clear whether salary tries have tried and if so, how difficult. Nobody from the company would comment.
In a court registration, it tried to wipe the hands of the matter and claimed that it had no trust for Mr. Handy and he took possession of the checks before the thief steel.
But here is the thing with his overall process: in a world that is absolutely impressed with check fraud, what did Paychex press down in the first place?
If “Chex” is on your behalf and you are not a breakfast flakes, paper tests may be a question of branding consistency. However, there are other considerations, and Paychex is not the only one who has to weigh different options. A retirement provision called Capitalizes reported last year that 43 percent of the people who reacted to his survey had to use paper tests during their roll processes.
Yes, the electronic transmission of an old 401 (K) provider to a new one is possible. In some cases, the fidget of money by the ether does not allow any important information about the money that you can include.
The Internal Revenue Service has an interest in every single rollover. It does not want people to sneak money from old -age provision without paying taxes or punishments that are due, and it wants the new company to keep the money to know what kind of retirement provision it is. Without knowing the guy, nobody can later tell the IRS which taxes they submit or tell the participant what he or she owes.
And guess what. With paper controls you can only put words on you that explain, explain or signal the account from which the money comes from and where it should end. Therefore, 401 (K) companies offer both options – electronically (with additional functions or procedures to ensure that the correct tax information is moved with the money) and paper checks.
But come! It is 2025. Would it be so complicated to write software to enclose the relevant information to the individual electronic transfer of pension accounts of a person?
Maybe not. But without guidance of the finance department, only a few companies (and especially their lawyers) want to take the opportunity to go wrong and end up in hot water. The IRS will soon offer more clarity, and the main actors in the 401 (K) industry can hardly wait. I imagine that salaries can hardly wait. Stories like this are a junction for companies that take into account their offers.
Nevertheless, Mr. Handy, who was 33 years ago two years ago, believes when he asked about the Rollover that Paychex could have done a lot more to prevent this situation. He said no one in Paychex had ever told him that electronic transmission was possible, although he later found out that he could have moved his money in this way.
He had never done a rollover either. And while the thought came into harmony that the use of paper checks was somewhat risky, he found that he should do what was said to him: Wait until the checks came by post and then transferred them to the new provider.
And another thing: Why doesn't Paychex send six -digit checks via Fedex or Certified Mail? Mr. Mobile phone now wishes that he would have sent the money to his new 401 (K) provider in this way.
Again he followed instructions or at least after the experts. He treated the checks that he sent to his new Pectirement Fund Company, as Paychex had by bringing them into normal post.
So what should we learn here? It may seem intuitive to avoid paper and, if possible, become electronic, but there does not seem to be any industry -wide data that shows that Rollover fraud takes place more often during paper controls.
Perhaps checks are actually safer and Mr. Cell phones are a coincidence. After all, thieves can find ways to output or manipulate them and steal their old -age pre -sores in a paperless way.
Nevertheless, everyone who makes a rolling – some kind – should hypervigilant. Take a look at your accounts every day for electronic transactions that you initiate and address yourself if you do not take place on schedule.
If you use paper controls, request the safest possible shipping process. And if you manage retirement plans for your colleagues – also earlier – make sure that you know about all your roll -over options and are aware of the paper -check albaum by Mr. Handy.
Not every one of our “How did that happen?” Stories will have a happy ending. Paychex has not reunited Mr. Handy with his money. Neither chase, although the citizens have caused reimbursement. A chase spokesman said that PNC should come to Bank-to-Bank-Bank to bank to request the money, and that Chase had no records that PNC did this.
Paychex could probably order PNC to follow the approach, but it doesn't seem to have tried. Mr. Handy once went to PNC, but it told him that he had to record it with Paychex.
Mr. Handy now has another problem: he can owe the IRS money because a thief redeemed his retirement money early.
If that has passed, he does not intend to send the agency a check.