Former Employer Hasn’t Deposited 401(k) Contributions

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Topic Author
roth evangelist
Posts: 261
Joined: Wed Jul 01, 2020 9:56 pm

Former Employer Hasn’t Deposited 401(k) Contributions

Post by roth evangelist »

Here’s the situation:
  • I was laid off in March
  • I made 5 employee deferrals into my 401(k) in 2024
  • My employer in turn made 5 safe harbor matching contributions
  • Only my January contributions (and safe harbor match) have been deposited so far (back when I was still an employee)
  • I’ve been back and forth with the HR person for weeks now and every time they promise they’ll get it figured out, the contributions should be showing up now, etc., etc.
  • The week before last they insisted everything had been thoroughly looked over and that my contributions should finally show up mid last week. They didn’t and I waited until today (Monday) to be sure, and they haven’t shown up.
  • My patience is wearing thin (my correspondence has been nothing by polite and long-suffering)
I’ve looked this up, and employers have until the 15th day of the following month to post contributions to a 401(k) plan.

Here’s what I’m missing:

2/5 Deferral (2 months late)
2/5 Safe Harbor Match (2 months late)
2/20 Deferral (2 months late)
2/20 Safe Harbor Match (2 months late)
3/5 Deferral (1 month late)
3/5 Safe Harbor Match (1 month late)

What course of action would you recommend? DOL complaint? Anyone been in this situation before?

Thanks!
the_wiki
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by the_wiki »

Can file, or threaten to file a complaint with the EBSA

https://www.dol.gov/agencies/ebsa/about ... n/ask-ebsa
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ResearchMed
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by ResearchMed »

roth evangelist wrote: Mon May 13, 2024 10:30 pm I’ve looked this up, and employers have until the 15th day of the following month to post contributions to a 401(k) plan.

Here’s what I’m missing:

2/5 Deferral (2 months late)
2/5 Safe Harbor Match (2 months late)
2/20 Deferral (2 months late)
2/20 Safe Harbor Match (2 months late)
3/5 Deferral (1 month late)
3/5 Safe Harbor Match (1 month late)

Before filing a formal complaint, how about sending HR/Benefits (or ?) a written letter, with return receipt requested, including what you wrote above, about the 15th day and how late the various payments are.

If you want to play hardball straightaway, you could let them know that if they don't get it corrected by the 15th of June (or some other date with enough time for them to do *something*), then you'll file an official complaint.

However, that might quickly escalate the entire situation to the legal department, which probably will *not* make things easier or faster (?).
So maybe only tell them that you "expect them to have it corrected by <date> with all of the money where it belongs AND with interest, perhaps using a good MMF that you already use, if you have a good one, with the ~5% rate.
And if they don't do that, then either give them deadline a complaint looming, or... just file the complaint. You've been more than patient.

(Double check which agency should receive the complaint before actually naming one if you mention that.)

RM
This signature is a placebo. You are in the control group.
SuzBanyan
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by SuzBanyan »

If you have a friend still at the company, ask if this is an issue for them as well. If the Company has failed to deposit just for you, that is one thing. If they have stopped for everyone, that is likely a sign of a much bigger issue.

I had a former employer that failed to contribute the employer match to my SIMPLE IRA. I decided not to be the squeaky wheel as the dollar amount for just a few days of work in the year was very small. In hindsight, I wished I had made a ruckus because the controller had failed to contribute to anyone’s SIMPLE (including his own) and such failure was just the tip of the iceberg that didn’t get fully revealed until over a year later.
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Watty
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by Watty »

It sounds like you have been dealing with the HR or Payroll department.

If you are on relatively good terms with your old manager then you might contact him or her to ask for help.

Sometimes when a HR clerk gets a call from a manager in a different department who knows their boss you will get a lot quicker results.
Topic Author
roth evangelist
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by roth evangelist »

ResearchMed wrote: Mon May 13, 2024 10:47 pm
roth evangelist wrote: Mon May 13, 2024 10:30 pm I’ve looked this up, and employers have until the 15th day of the following month to post contributions to a 401(k) plan.

Here’s what I’m missing:

2/5 Deferral (2 months late)
2/5 Safe Harbor Match (2 months late)
2/20 Deferral (2 months late)
2/20 Safe Harbor Match (2 months late)
3/5 Deferral (1 month late)
3/5 Safe Harbor Match (1 month late)

Before filing a formal complaint, how about sending HR/Benefits (or ?) a written letter, with return receipt requested, including what you wrote above, about the 15th day and how late the various payments are.

If you want to play hardball straightaway, you could let them know that if they don't get it corrected by the 15th of June (or some other date with enough time for them to do *something*), then you'll file an official complaint.

However, that might quickly escalate the entire situation to the legal department, which probably will *not* make things easier or faster (?).
So maybe only tell them that you "expect them to have it corrected by <date> with all of the money where it belongs AND with interest, perhaps using a good MMF that you already use, if you have a good one, with the ~5% rate.
And if they don't do that, then either give them deadline a complaint looming, or... just file the complaint. You've been more than patient.

(Double check which agency should receive the complaint before actually naming one if you mention that.)

RM
Yeah I have yet to threaten them with filing a compliant and I have not brought up the fact that these contributions are legally late. Giving them some ultimatum might be the only way forward at this point.
evancox10
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by evancox10 »

roth evangelist wrote: Tue May 14, 2024 10:24 am
ResearchMed wrote: Mon May 13, 2024 10:47 pm
roth evangelist wrote: Mon May 13, 2024 10:30 pm I’ve looked this up, and employers have until the 15th day of the following month to post contributions to a 401(k) plan.

Here’s what I’m missing:

2/5 Deferral (2 months late)
2/5 Safe Harbor Match (2 months late)
2/20 Deferral (2 months late)
2/20 Safe Harbor Match (2 months late)
3/5 Deferral (1 month late)
3/5 Safe Harbor Match (1 month late)

Before filing a formal complaint, how about sending HR/Benefits (or ?) a written letter, with return receipt requested, including what you wrote above, about the 15th day and how late the various payments are.

If you want to play hardball straightaway, you could let them know that if they don't get it corrected by the 15th of June (or some other date with enough time for them to do *something*), then you'll file an official complaint.

However, that might quickly escalate the entire situation to the legal department, which probably will *not* make things easier or faster (?).
So maybe only tell them that you "expect them to have it corrected by <date> with all of the money where it belongs AND with interest, perhaps using a good MMF that you already use, if you have a good one, with the ~5% rate.
And if they don't do that, then either give them deadline a complaint looming, or... just file the complaint. You've been more than patient.

(Double check which agency should receive the complaint before actually naming one if you mention that.)

RM
Yeah I have yet to threaten them with filing a compliant and I have not brought up the fact that these contributions are legally late. Giving them some ultimatum might be the only way forward at this point.

Those deferrals are seriously late at this point and constitute a prohibited transaction (loan to the employer) on which they would legally owe excise tax (if not eligible for some form of abatement under voluntary disclosure programs, etc.). I believe to bring the plan into compliance they are legally required to not only deposit your deferrals but also make up for lost earnings.

Is this a large employer, or small family owned business? If they are doing lay offs and not making 401k deferrals, maybe they are in pretty bad financial condition. Do you think maybe they just don't have the cash? I think you should file the complaint sooner rather than later, current methods haven't gotten you anywhere so far. 401k deferrals are not something you should ever even have to ask for. And if you do have to ask, asking once should be enough to get it fixed.
Topic Author
roth evangelist
Posts: 261
Joined: Wed Jul 01, 2020 9:56 pm

Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by roth evangelist »

evancox10 wrote: Tue May 14, 2024 11:40 am
roth evangelist wrote: Tue May 14, 2024 10:24 am
ResearchMed wrote: Mon May 13, 2024 10:47 pm
roth evangelist wrote: Mon May 13, 2024 10:30 pm I’ve looked this up, and employers have until the 15th day of the following month to post contributions to a 401(k) plan.

Here’s what I’m missing:

2/5 Deferral (2 months late)
2/5 Safe Harbor Match (2 months late)
2/20 Deferral (2 months late)
2/20 Safe Harbor Match (2 months late)
3/5 Deferral (1 month late)
3/5 Safe Harbor Match (1 month late)

Before filing a formal complaint, how about sending HR/Benefits (or ?) a written letter, with return receipt requested, including what you wrote above, about the 15th day and how late the various payments are.

If you want to play hardball straightaway, you could let them know that if they don't get it corrected by the 15th of June (or some other date with enough time for them to do *something*), then you'll file an official complaint.

However, that might quickly escalate the entire situation to the legal department, which probably will *not* make things easier or faster (?).
So maybe only tell them that you "expect them to have it corrected by <date> with all of the money where it belongs AND with interest, perhaps using a good MMF that you already use, if you have a good one, with the ~5% rate.
And if they don't do that, then either give them deadline a complaint looming, or... just file the complaint. You've been more than patient.

(Double check which agency should receive the complaint before actually naming one if you mention that.)

RM
Yeah I have yet to threaten them with filing a compliant and I have not brought up the fact that these contributions are legally late. Giving them some ultimatum might be the only way forward at this point.

Those deferrals are seriously late at this point and constitute a prohibited transaction (loan to the employer) on which they would legally owe excise tax (if not eligible for some form of abatement under voluntary disclosure programs, etc.). I believe to bring the plan into compliance they are legally required to not only deposit your deferrals but also make up for lost earnings.

Is this a large employer, or small family owned business? If they are doing lay offs and not making 401k deferrals, maybe they are in pretty bad financial condition. Do you think maybe they just don't have the cash? I think you should file the complaint sooner rather than later, current methods haven't gotten you anywhere so far. 401k deferrals are not something you should ever even have to ask for. And if you do have to ask, asking once should be enough to get it fixed.
The employer is a small business. I have no reason to believe they are struggling financially. I think it's mostly a case of an extremely flaky (they have always been this way to be honest) and/or incompetent HR person.
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beyou
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by beyou »

Your state dept of labor is likely the way to go.
renter
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by renter »

In your next correspondence copy the CEO (attach the email threads for reference) and let them know if not resolved quickly you will be left with no choice but to file complaints with all of the relevant federal and state government agencies. They won't want to waste time and resources on that if they are clearly in the wrong.
Buzzman
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by Buzzman »

All I can suggest is to keep interacting with HR and maybe try to engage a senior manager to work it from the other POV.

I left my final employer in late October of 2022. I always front loaded my 401k contributions so all of my deductions that last year came out of my pay by about April or May. After I left, I noticed that my employer hadn't paid all their matching funds and contacted HR in November. They stated that there would be a true up and by the end of December I should see the companies contribution. Well, the end of December 2023 came and went with no deposits from them. More emails to HR and a few BCC's to some of the senior managers, and even then I saw no deposits in January, nothing in February, nothing in March. I just knew they would have to true it up before April 15...nope. More emails to now a new HR person because the other one quit...I think it was finally like July of 2023 that I saw a deposit to my 401k account. So, 9-10 months later they paid out what they owed me (and maybe a little more).

I honestly think that if I hadn't kept sending emails and constantly engaging and checking the status I wouldn't have gotten the money. I was persistent but polite. I got where I was emailing every week or two just to be the squeaky wheel and let them know I wasn't going away.

Again, all I can suggest is to keep interacting with HR and maybe try to engage a senior manager to help. Other than that it becomes a legal situation.
HomeStretch
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by HomeStretch »

Not timely remitting payroll withholdings for 401k contributions, payroll taxes, etc. can be a sign that a small company is having cash flow issues. If the company files for bankruptcy protection, you would lose your unremitted deferrals unless the company has assets to pay the creditor claims (generally certain employee payments have priority but there have to be assets to pay it).

Do you keep in contact with any employees where you can ask if they also have had 401k contribution withholdings not deposited with the 401k custodian?

One reason to file a complaint with the DOL is that your former employer is required to correct this serious plan error by making you whole for earnings that you would have received had your contributions been deposited timely. You may also be entitled to receive additional $ as a penalty. Your employer’s error jeopardizes the 401k plan’s qualified status. The IRS/DOL prescribes the corrective measures.
https://www.irs.gov/retirement-plans/40 ... -deferrals
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vnatale
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by vnatale »

One place where I worked I'd have my entire net paycheck go to my 401(k) contributions so as to hit the annual limit as soon as possible.

However, it forever for them to get to my account simply because the person responsible for doing them was super lazy.

I resented this as I considered this my money that should be somewhere the same as any of my net paycheck should get to my account without delay.

Later I was responsible for the preparing the payroll for an organization.

Under my above philosophy - that it was the employees' money - the same day I sent off all their paychecks to be deposited I also sent off the Simple IRA contributions (plus the organization's match).

Given that this is a former employer ... I'd not be afraid of offending anyone and would frequently contact several people at your former employer who could exert any influence on moving this along.

Also, would constantly remind them of the rules and that they could have liability for the lateness of putting the money into your account.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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leeks
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by leeks »

As this is a small business, it is time to address it with the owner/head of the company.
glitchy
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by glitchy »

Buzzman wrote: Wed May 15, 2024 12:22 am After I left, I noticed that my employer hadn't paid all their matching funds and contacted HR in November. They stated that there would be a true up and by the end of December I should see the companies contribution. Well, the end of December 2023 came and went with no deposits from them.
Thanks for mentioning this, I also front-load 401(k) contributions, am almost certainly about to be out of work, and I figured I was SOL on getting the end-of-year true-up. Good to know it might still be an option!

I do wonder what will happen if the 401(k) is closed out by then. (Usually there's some way this kind of thing works out but it might require manual intervention!)
toddthebod
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by toddthebod »

This is egregious and will likely result in substantial penalties for the company. I would call the 800 number on the EBSA website and discuss the situation with them.
https://www.dol.gov/agencies/ebsa/about ... n/ask-ebsa

Remember, this is your money. It is your actual wages they have withheld. If you wrote, "I was laid off in March, haven't been paid since the beginning of February, and HR is giving me the run around," what would you do?
NBCPA
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by NBCPA »

Former 401(k) plan auditor. As commented previously the failure to remit the employee portion is a prohibited transaction and failure of the employer contributions are plan operational failures. The Dept of Labor and IRS both have enforcement authorities in this area, but contacting the Department of Labor will be more direct to the issue. Your best bet is the office of the chief accountant at this link.

https://www.dol.gov/agencies/ebsa/about ... -chart#oca

Also just to clarify the timing responsibilities, the rule is funds withheld should be remitted to the plan’s trust as soon as administratively possible. Given modern payroll platforms that really shouldn’t be more than 2 or 3 days. The 15 days rule is the absolute outside longest time to remit but in reality an auditor (CPA or DOL) would most certainly find a company using that timeframe to be not compliant.
Topic Author
roth evangelist
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by roth evangelist »

Thank you all for the responses. I have a great update. On Monday, I sent an email to HR outlining that I would file an official complaint if I didn't start seeing progress. As of today, all my contributions have been posted. Just took a little escalation to get things moving.
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vnatale
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by vnatale »

roth evangelist wrote: Fri May 17, 2024 12:42 pm Thank you all for the responses. I have a great update. On Monday, I sent an email to HR outlining that I would file an official complaint if I didn't start seeing progress. As of today, all my contributions have been posted. Just took a little escalation to get things moving.
Excellent news! Thanks for the update!
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
LotsaGray
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by LotsaGray »

roth evangelist wrote: Fri May 17, 2024 12:42 pm Thank you all for the responses. I have a great update. On Monday, I sent an email to HR outlining that I would file an official complaint if I didn't start seeing progress. As of today, all my contributions have been posted. Just took a little escalation to get things moving.
Thiss would completely peeve me to the point I would now go to full battle mode. Since it is obvious they could have done the right thing whenever I would fi,e a formal complaint. Or I would demand they make me whole on lost earnings. If they are doing this to others, which would not surprise me, the company needs to be stopped. If they are doing it to ‘many’ I might seek a lawyer to file class action or similar.
HomeStretch
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Re: Former Employer Hasn’t Deposited 401(k) Contributions

Post by HomeStretch »

Good to hear your employer finally contributed your 401k deferrals. However this does not fully correct their serious plan error. As linked above, the IRS voluntary corrective steps include making you whole for lost earnings. There may also be an additional penalty owed by the plan sponsor (employer) to you.

Asking for credit for the lost earnings is not greedy on your part, you are entitled to it. If they don’t correct this issue properly it jeopardizes the plan’s qualified tax status which in turn impacts you and the other plan participants.
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