With her 4-year-old granddaughter racking up hospital bills, Chris Knowles decided to help by cashing out her 401(k) retirement plan from L.B. Foster Co. recently.
It was gone. All $14,313 of it.
After receiving account statements for over eight years, Knowles was told last week by the company in Green Tree that she was never vested in the retirement plan to begin with.
"I'm angry because they let this go on for so bloody long," said Knowles, 50. "We live in an age where the hot button is someone screwing with your stock or your retirement."
L.B. Foster employs 655 people in 30 offices in 18 states. The company provides fabricated metals and other products and services to the railroad, transportation and other industries.
"It was an error by our record keeper," said chief financial officer David Russo, who said the mistake affected "less than 20" of L.B. Foster's former employees.
"These accounts were entirely unvested," said Russo on Friday. "We're just now in the process of notifying these people."
None of the employees had contributed their own funds into the accountsbecause of their early departure from the company. Rather, the money that accrued to them consisted of L.B. Foster profit-sharing contributions of company stock.
The recordkeeper for the retirement plan was and is Fidelity Investments, Boston. Spokesman Mike Shamrell would not comment because Fidelity does not discuss client business.
L.B. Foster workers' 401(k) plan was worth a total of $49.7 million on Dec. 31, according to most-recent figures from a securities filing.
Knowles believed that her slice of that retirement pie was $8,892 in August 2006, according to her online Fidelity account statement at the time. A recent statement informed Knowles her portion had soared to $14,478 as of Aug. 14.
"So I called Fidelity to cash this in," said Knowles, citing the financial bind of her daughter. "I"m thinking, here's a wonderful thing I could do for my granddaughter in the hospital."
But when she contacted Fidelity to withdraw the funds, said Knowles, an associate told her a "stop" had been placed on her account. And when she went online to check its status on Aug. 18, the statement said her the account was worth $14,313, but the vested amount -- the amount she was entitled to -- was worth $0.
"The information is supposed to be accurate because people rely on it for retirement and other lifestyle purposes," said Michael Healey, an employment-law attorney at Healey & Hornack, Downtown.
"If they make representations that you're vested, that presents a potential cause of action, based on a breach of fiduciary duty," Healey said.
Knowles, of suburban San Diego, had worked for a former L.B. Foster division from February 1999 to January 2001. She left to start a company that provides scientific research to the bio-technology industry. L.B. Foster sold the division's assets for $4 million in February 2006.
Her two-year employment period was far short of the five years necessary to become fully vested, according to the rules in place at the time. Nor was Knowles partially vested because a worker needed three years to become 25 percent vested.
L.B. Foster's Russo said the error -- listing workers as vested who were not -- was discovered "in the past 30 days" during a plan audit. He suspects the error stemmed from changes made last summer, including broadening participants' investment options and shortening the vesting period to two years from the previous five.
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