How Safe Is Your 401K?

Mike Campos is worried. He invested his money in a 40lK plan only to find out it had been ripped off. "How would you feel if you worked 20 years for someone and had nothing to show for it," he says.

Campos is among seven men who made up the sales force in a small, California tractor dealership owned by Mike Kovac, reports CBS News Correspondent Ray Brady. Kovac was their boss, their friend, and the man court papers charge stole funds from his employees 40lK plan. Now, all $98,581 of the retirement money is gone.

"I'm not really sure I like 401K programs," says Fred Immell, another member of Kovac's sales force. "If the man had come with us with a gun and robbed us, we'd have been able to take a tax deduction," says another of the salesmen, Tim McMillan. "We can't even do that."

Unlike traditional pension plans, there is insurance against fraud on a 40lK. Your 40lK investment is protected primarily by the Labor Department, which both polices some funds and attempts to recover money stolen from them.

But out of more than 3,700 cases since l985, the Labor Department's own figures show that it collected money only one-third of the time. "Of those cases, we actually recovered 90 percent of the funds, which amounted to $53 million for workers, Labor Secretary Alexis Herman says. "And it covered about 40,000 workers."

That may sound impressive, but as the tractor salesmen found, there's a loophole in the law: Specifically, 40lKs in companies with fewer than l00 workers are exempt from any audit from the federal government. That means that nearly four out of every l0 American workers has a 40lk that's basically unprotected.

"Approximately 70 percent of the complaints that we get, in fact, come from workers in small businesses," Herman says. "So, while we want to be sensitive to additional burdens of small business, we think that we do need to take further action to strengthen plans for workers within small business."

The Labor Department does run a kind of hotline for concerned employees, but giving some advice doesn't help workers who have been ripped off.

"The only way we're going to get the money back is if there's retribution by him, says tractor salesman Robert Groh. "And, the other satisfaction would be to see him go to jail."

"I'm going to have to work the rest of my life," Campos adds. "I mean you can never make it up."

Neither can 68-year-old Robert Lawless, the only one of the tractor salesmen who is retired. Living in a mobile home, he plays solitaire by day and watches television by night. All the while agonizing over the loss of his 401K money. " You never know when your health is going to go and money like that could come in handy," he says.