401k deposits

[me1973]

What is the name of your state? IA
I am in the process of leaving an employer and in reviewing the 401k information they provided me online, I see that they have not put any of my contributions into my 401k since last year. From the beginning of my plan, they also have been consistently late with deposits, they range from 1-4 months late from my pay period. What can be done to recoup my money that I could have earned had it been deposited on time? Are they required to refund me the interest? What are my choices? thanks.

 

[cbg]

Before I go any further, I want to be certain of something because it makes a GREAT deal of difference in how I advise you to proceed. This could be a tempest in a teapot or it could be something that could send your employer to jail. I don't want to be responsible for sending you down the wrong path. But if your employer should be in jail, I have no problems whatsoever with helping you send him there. I take employer responsibilities very seriously and have no respect for employers who do not.

Employers are required to make 401k contributions as quickly as possible. I believe the limit is 15 days after the end of the pay period. However, statements are only sent out quarterly. (I realize that on-line access, where available, can mean you can see exactly what's happening with your account on a daily basis.)

Where we are just getting close to the end of the quarter, are you ABSOLUTELY CERTAIN that it's not just a question of payments not yet showing up, as opposed to not having been made at all?

 

[me1973]

Yes, I verified today with the 401k company that the last deposit that they had received was for the 12/31/07 pay period, they received the money 1/30/07. That is what I first asked them, was is the online info only updated quarterly, no it is updated as they receive the funds. As I look back at everyone of the deposits, none of them have even been close to a 5 day (which I googled and found with the size of the company is now the safe harbor time for them) I believe the soonest has ever been was 30 days. Another of the employees checked theirs and also found this after I advised him to check (our 401K company is strictly online, it offers no mailed statements) and he played dumb and called HR to question, they gave him the line of 'I'm not sure, I'll look into it, it is proly just a time thing, takes time to transfer, etc'. This company is having financial problems, hence departments being cut. I'm not on a witch hunt either, but they have screwed with my funds, allbeit a small amt to them I'm sure, but no difference, it could've been earning interest in my accts instead of theirs.

 

[cbg]

Run, do not walk, to the phone. Call the US DOL and report this. It is flagrantly illegal.

 

[me1973]

Well, did that and got the ball rolling. Wow. Faxed all copies of my statements, etc and spoke again to the DOL, she contacted the employer and is getting copies of all of the paychecks, dates, 401k info and deposits, etc. She said she'll let me know when she finds a little bit more out. Right now, she said they'll go through all of that and figure out what needs paid, and they would immediately be reimbursing our accts and then some kind of penalty payable to us and then they have to deal with them, but she couldn't give me any idea of what b/c that will be between them and DOL. She did say that on the last 5500 they submitted they had not noted any late deposits, I'm assuming that would be even bigger problems if they did it then and also marked no for 2007 and this was discovered.

What kind of penalties are they facing? I'm just curious b/c evidently after speaking w/another employee they'd had some issues years past with not paying the insurance premiums and that ended up in a big mess, so I'm betting this is something that is continually going on and not just in the 401k's.
Thanks

 

[cbg]

I can't tell you what they're facing in penalties. I can tell you that a year or two ago, my then-employer (contract) was two weeks late making their deposit, twice. There was a valid reason for it that was not financial, it was a one-off deal (the two late deposits were in two sequential pay periods and the same reason applied for both - though it was two pay periods it was to all intents and purposes one instance), but nonetheless the employer was fined. So while I can't tell you WHAT penalies will be applied, I can guarantee you THAT penalties will be applied.

 

[me1973]

Thanks for the info. Another question, is it in our interest to get a lawyer on this or wait and see what all the DOL finds out? With as many that will be affected by this, I'm assuming they'll be looking at some hefty fines if not more.

 

[cbg]

I would say wait and see what the DOL comes up with. You can always hire one later if need be, but the DOL takes this kind of thing VERY seriously. So does the IRS.