Contribute to an Employer-Sponsored 401k with a Personal Check?

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ksb
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Joined: Thu Apr 18, 2013 1:04 pm

Contribute to an Employer-Sponsored 401k with a Personal Check?

Post by ksb » Wed Jan 10, 2018 6:52 pm

My wife switched her contribution to her employer-sponsored 401k plan to 100% of her net paycheck starting in December. So, the office manager unilaterally changed that back to her old, lower contribution rate for 2018. The office manager's response is, "I did screw up, but I already submitted things for this pay period, so tough."

Can my wife receive her next paycheck, and then turn around and contribute it into her 401k? Is this something that's plan dependent? If writing a check isn't a solution, is there another path forward here?

It's important to her that 100% of this paycheck go toward her 401k for reasons I'll omit.

livesoft
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Re: Contribute to an Employer-Sponsored 401k with a Personal Check?

Post by livesoft » Wed Jan 10, 2018 7:06 pm

I don't think a personal check is gonna work.

But one can contribute to a traditional IRA for 2017 until April tax day. I don't know if that will be helpful, but there it is.
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ERISA Stone
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Re: Contribute to an Employer-Sponsored 401k with a Personal Check?

Post by ERISA Stone » Wed Jan 10, 2018 7:11 pm

You can't do this. The participant cannot have access to the funds to be contributed to the plan.

I know it's frustrating but doesn't this just mean your wife will hit the maximum deferral one paycheck later? It shouldn't have any effect on a match.

123
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Re: Contribute to an Employer-Sponsored 401k with a Personal Check?

Post by 123 » Wed Jan 10, 2018 7:13 pm

As far as I know all 401k contributions generally must be by payroll deduction so that employee benefit and tax deductions will all work out.

She may want to ask what would happen if she simply returns the payroll check (perhaps she might accidentally step on, soil, or tear it) and requests that the funds be reissued to her? Only the company would know if they would simply cut a replacement check or apply the new 401K withholding rate to the replacement paycheck.
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ksb
Posts: 23
Joined: Thu Apr 18, 2013 1:04 pm

Re: Contribute to an Employer-Sponsored 401k with a Personal Check?

Post by ksb » Wed Jan 10, 2018 7:17 pm

Thank you all for sharing your advice. Sounds like life will go on, but not with this paycheck going toward her 401k.
ERISA Stone wrote:
Wed Jan 10, 2018 7:11 pm
I know it's frustrating but doesn't this just mean your wife will hit the maximum deferral one paycheck later? It shouldn't have any effect on a match.
That's the reasons I omitted. She may not be with her company for that one paycheck later, which explains her interest in what happens with this paycheck.

"She may want to ask what would happen if she simply returns the payroll check (perhaps she might accidentally step on, soil, or tear it) and requests that the funds be reissued to her?"

I like your thinking, but do not have 100% confidence in the same office manager who bungled this in the first place being able to properly handle this workaround. Also, now that I think about it, she's on direct deposit.

ERISA Stone
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Joined: Tue Jun 24, 2014 8:54 am

Re: Contribute to an Employer-Sponsored 401k with a Personal Check?

Post by ERISA Stone » Wed Jan 10, 2018 7:24 pm

ksb wrote:
Wed Jan 10, 2018 7:17 pm
Thank you all for sharing your advice. Sounds like life will go on, but not with this paycheck going toward her 401k.
ERISA Stone wrote:
Wed Jan 10, 2018 7:11 pm
I know it's frustrating but doesn't this just mean your wife will hit the maximum deferral one paycheck later? It shouldn't have any effect on a match.
That's the reasons I omitted. She may not be with her company for that one paycheck later, which explains her interest in what happens with this paycheck.

"She may want to ask what would happen if she simply returns the payroll check (perhaps she might accidentally step on, soil, or tear it) and requests that the funds be reissued to her?"

I like your thinking, but do not have 100% confidence in the same office manager who bungled this in the first place being able to properly handle this workaround. Also, now that I think about it, she's on direct deposit.
If one of my employees returned a damaged paycheck, I would have that check cancelled and I would write them a 2nd one for the net. Repectfully, I can't envision any scenario that would cause me to revise a payroll for a similar situation.

I know it's a headache but this was caught in plenty of time and is well within any regulated timeframe for the participant to make up contributions. The company doesn't owe penalties or anything like that.

ksb
Posts: 23
Joined: Thu Apr 18, 2013 1:04 pm

Re: Contribute to an Employer-Sponsored 401k with a Personal Check?

Post by ksb » Fri Jan 12, 2018 6:11 pm

Conclusion: after the office manager repeatedly said there was nothing to be done, my wife showed her the section in the plan administer's website that says how to correct this exact situation. So, the office manager corrected this, and my wife is happy.

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