Hello, I am not sure what forum to put this in, but this is a good spot. I have recently discovered some odd things with my employer and paycheck. The company changed 401k providers a couple of months ago so not getting a statement seemed typical of the changeover. I checked on the account about a month ago and discovered that money I have been setting aside for the 401k contribution has not been deposited for the previous 4 months. Direct deposit of paychecks have not been done a couple of times which was described as computer issues at the time. I have had a couple of discussions with the finance person and the owner who have since described it to the entire staff as a cash flow issue. Basically we have been told the company is very busy, but a couple of large clients have not been paying bills and that has caused the cash flow problem. They have made up for this shortfall by not making the 401k distributions. This has me concerned for a number of reasons to say the least. This is my money that is being taken. Has anyone else encountered this issue before? What other concerns or items should I look for, the worst being the company could go under and I lose the money. Needless to say, I am brushing up the resume. Thanks for the input. It would be nice to get third party opinions on this and hear other peoples experiences.
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Has this happened to anyone?
- Thread starter work2play
- Start date
Call you state department of labor.
Call the US department of labor ( wage and hour division).
There is lots of help available on this type of thing, start with the goverment section of the phone book. Keep calling untill you get an answer. also try your congressman.
It's not just a cash flow if they are not making requirement required by law, people have been taken away in handcuffs for similar actions.
Call the US department of labor ( wage and hour division).
There is lots of help available on this type of thing, start with the goverment section of the phone book. Keep calling untill you get an answer. also try your congressman.
It's not just a cash flow if they are not making requirement required by law, people have been taken away in handcuffs for similar actions.
I got the following from our HR person:
Any payroll deductions for 401k plans has to be deposited in the 401k accounts by the 15th of the month following the deduction.
Current DOL regulations provide that employee contributions to a 401k plan become plan assets as of the earliest date on which such contributions could reasonably be segregated from the employer's general assets (the "general rule"), but in no event later than the 15th business day of the month following the month in which the contributions are received by the employer or, in the case of amounts withheld from wages, would otherwise have been payable to the participant (the "maximum period").
The regulations contain a process by which a plan sponsor may be able to obtain an extension of the maximum period subject to, among other requirements, a participant notification requirement.
I would advise the participant to contact the investment advisor or Third Party Administrator for guidence on what their options are before they would contact the DOL.
Any payroll deductions for 401k plans has to be deposited in the 401k accounts by the 15th of the month following the deduction.
Current DOL regulations provide that employee contributions to a 401k plan become plan assets as of the earliest date on which such contributions could reasonably be segregated from the employer's general assets (the "general rule"), but in no event later than the 15th business day of the month following the month in which the contributions are received by the employer or, in the case of amounts withheld from wages, would otherwise have been payable to the participant (the "maximum period").
The regulations contain a process by which a plan sponsor may be able to obtain an extension of the maximum period subject to, among other requirements, a participant notification requirement.
I would advise the participant to contact the investment advisor or Third Party Administrator for guidence on what their options are before they would contact the DOL.
casseopeia
Structural
Sounds like your employer is in violation of federal law. 401k contributions fall under ERISA. Here's a link to get you started with some background. This website also has links to various State agencies,
If I were you, I'd find an attorney who specializes in Labor Law in your State. When you call them, ask if they have any experience with ERISA violations.
"If you are going to walk on thin ice, you might as well dance!"
If I were you, I'd find an attorney who specializes in Labor Law in your State. When you call them, ask if they have any experience with ERISA violations.
"If you are going to walk on thin ice, you might as well dance!"
work2play,
I assume that you are an employee. If you are an employee, then there is no excuse for the delayed payment of the monies your employer is obligated to pay you for your services.
If you had an ownership stake in the company, then I can see good reason to delay paying yourself until the cash flow is back to a comfortable position.
I assume that you are an employee. If you are an employee, then there is no excuse for the delayed payment of the monies your employer is obligated to pay you for your services.
If you had an ownership stake in the company, then I can see good reason to delay paying yourself until the cash flow is back to a comfortable position.
". . . but in no event later than the 15th business day of the month following the month in which the contributions are received by the employer or, in the case of amounts withheld from wages, would otherwise have been payable to the participant. . ." -- i.e. could be up to about 1.5 months, but not the 4 you stated.
Ask your rep what is laid out in the program, and compare to the DOL requirements. I would also ask what rate they are paying you to withhold your money, just to jab.
"The company changed 401k providers a couple of months ago so not getting a statement seemed typical of the changeover." -- Not in my experience. This is when you should see statements closing out one, and opening the other. This is where I have seen more statements.
You make it sound as if there is one owner of the company. Is he getting a salary? Is he taking it, and not paying you your specified benifits? I would guess that he makes a pretty fair amount, as owner, and should for the risk he took; however, as the owner, the risk does not stop after the start up. I think he should be making the sacrifice, not your 401K. Can he not get a line of credit, or is that maxed out? He should be taking the clients to court for payment, if the impact is so great as to disrupt pay and benifits. Whats next, hold off on the health insurance payment and they drop you?
Ask your rep what is laid out in the program, and compare to the DOL requirements. I would also ask what rate they are paying you to withhold your money, just to jab.
"The company changed 401k providers a couple of months ago so not getting a statement seemed typical of the changeover." -- Not in my experience. This is when you should see statements closing out one, and opening the other. This is where I have seen more statements.
You make it sound as if there is one owner of the company. Is he getting a salary? Is he taking it, and not paying you your specified benifits? I would guess that he makes a pretty fair amount, as owner, and should for the risk he took; however, as the owner, the risk does not stop after the start up. I think he should be making the sacrifice, not your 401K. Can he not get a line of credit, or is that maxed out? He should be taking the clients to court for payment, if the impact is so great as to disrupt pay and benifits. Whats next, hold off on the health insurance payment and they drop you?
Four months is a long time, but the HR person JAE's company hit it on the head--talk to your company before taking an irrevocable step like sicing the DOL on them. Maybe go to the finance person and/or the owner and say "four months is too long, is there any reason for this not to be current this week?" If the reason is reasonable then get the date when it will be current, don't accept a number more than 2 weeks out. If they can't give you a date or they miss the date then you don't have a choice but to escellate it. Whatever you do, DON'T THREATEN THEM ("pay me by Friday or I'm going to the Department of Labor") because you really don't know how they'll react to a threat (they may get you current and fire you).
Remember that the owners of the company are in technical violation of federal law at this point. Raising the flag will certainly start action that could easily end up with them in jail, the company defunct, and the employees unemployed. Whatever you do beyond your company, start with a talk with an attorney that you trust.
The people who kept their heads in the early days of the Enron failure got more of their assest out and intact than the ones who ran to the government and/or press.
David
Remember that the owners of the company are in technical violation of federal law at this point. Raising the flag will certainly start action that could easily end up with them in jail, the company defunct, and the employees unemployed. Whatever you do beyond your company, start with a talk with an attorney that you trust.
The people who kept their heads in the early days of the Enron failure got more of their assest out and intact than the ones who ran to the government and/or press.
David
You don't need to hire an attorney, the goverments got enough on the payroll allready.
I think you get anonimity ( for a while at least). This isn't a civil action, it's more like seeing someone rob a gas station. Are you going to be quite because you don't want to get involved or might loose your job? Your involved now.
I think you get anonimity ( for a while at least). This isn't a civil action, it's more like seeing someone rob a gas station. Are you going to be quite because you don't want to get involved or might loose your job? Your involved now.
The company may be going down. Being busy doesn't mean anything if they are having to borrow or steal to stay afloat. Eventually it could catch up to them. Unless it was a one-of-a-kind position that you love and cannot find another similar, I would be gone as soon as I found something else.
Get something else lined up and then explain to them that they are breaking the law.
Ed
Get something else lined up and then explain to them that they are breaking the law.
Ed
Yes, the exact same thing happened to me.
In addition to the 401(k) payments, my former employer was deducting taxes from paychecks, but not forwarding that to the government either. It is very likely the same is happening to you.
My former employer went bankrupt. The owners should have gone to jail, but didn't. They did eventually make good on the payments as part of the bankruptcy, but my tax history for that year is still screwed up.
Talk you your vendors, see if they are getting paid.
Bottom line is you are getting screwed, your company is violating several laws and will most likely go bankrupt.
Get out now!
In addition to the 401(k) payments, my former employer was deducting taxes from paychecks, but not forwarding that to the government either. It is very likely the same is happening to you.
My former employer went bankrupt. The owners should have gone to jail, but didn't. They did eventually make good on the payments as part of the bankruptcy, but my tax history for that year is still screwed up.
Talk you your vendors, see if they are getting paid.
Bottom line is you are getting screwed, your company is violating several laws and will most likely go bankrupt.
Get out now!
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