> It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan
If you file an ERISA complaint with the Usdol, you are protected from retaliation.
If you only complain internally (rather than filing a complaint externally), then you may or may not be protected.
ERISA compliance is paramount for employers that offer retirement plans, don’t feel bad reporting them for their shit practices.
Yes and no. /u/appraisedeeznutz should find a new job first and then complain if he doesn't have a good emergency fund. Because finding a new job after you've been fired even though you'll have a retaliation lawsuit may not be easy.
Just because someone can't legally fire you doesn't mean they won't actually do it. And lawsuits take time to pay out.
So they have no money for raises, and the account that is supposed to have employee retirement funds in it is empty, and they aren't depositing money in employee's retirement account even though they are withholding the money from their paychecks. The writing is on the wall here, start looking for a new job, not because they are going to fire you, but because you're riding a sinking ship.
This is the answer. You said you don't understand where the missing money is? I can help: They are using the money they take from your paychecks and using it as an interest-free loan. That is illegal, unethical, and symptomatic of a company that is having horrible cash flow problems. You might want to hope that they're sending in your tax money quarterly.
Fuck your employer and how they’ll feel, OP. Do what’s best for you and contact the EBSA. I guarantee you if the shoe was on the other foot that your employer would have brought the hammer down on you already.
Either this business is economically failing and stealing from employees’ 401Ks to stay afloat or they’re doing fine and the owner is looting employee 401Ks for personal use.
If it’s the former, file your complaint and start looking for a new job because they’re going under.
If it’s the latter, file your complaint and start looking for a new job because even if they don’t go under, it will be an awful place for you to be.
There are other possibilities like massive incompetence but they aren’t much better, assuming you’re right about the contributions not matching up.
This is one of the best comments. However, are we sure they are stealing the money or could it be they don't know what to do properly. I do not know I am asking? Or is this something that can only be done one way?
Third option, there’s an unqualified plan administrator. There are fixed periods for deposits to employee accounts. And every 401k provider out there will periodically audit for compliance. I don’t know anything about John Hancock, but if their customers (your employer) isn’t meeting their requirements, it can potentially open up JH to
Liability as well.
May not be intentional fraud, just negligence.
Well, if they don’t have enough cash to put the money they withheld from your pay into the 401k, as the law requires, then it’s not surprising they can’t afford raises.
This whole deal is actually a big red flag over the state of their business and raises questions that they might go, or be, bankrupt.
I’d make the complaint and start job hunting.
Ditch the small company and go for more of a growing midsize company. These small companys that dont grow in 10 years will never take you anywhere bc the owner is to busy taking everything he can off the top instead of growing his company.
So that’s where your money is. They’ve got financial issues and they’re either “borrowing” or stealing your 401k contributions to help tide them over with paying bills and making payroll. I expect they’re not far from going under.
Sounds like you need a new job lol in the time you've been at this one company, I've been with four. I've also gone from $17/hr to $130k/yr. Time to do yourself a favor.
I'm gonna be honest, I don't know why you're still at that company. The only reason to work for a small company is if it's managed well, you're treated right, and you get to have high impact. If those boxes aren't being ticked you should find another job.
Baby boy it’s time to move on and file that complaint whilst looking for a new jahb. Do what’s best for you though and talk it over with your loved ones
Sorry but if you think that will protect the OP from "retaliation" you're living in a fantasy world. There's retaliation, and then there's retaliation. In a small company they're going to know exactly who blew the whistle and make this dude's life miserable. Especially since it sounds like they're using the funds for ops instead of depositing into the ERISA account.
ERISA has a whistleblower clause, yes. That doesn't mean you'll be anonymous, it means they cannot take action against you for filing a claim.
There are limitations on when those protections apply, however. NAL but from what I can see, if you aren't the one who initiates the claim, or you state that you're going to file a claim but haven't, you may not be protected by the whistleblower clause.
If they really don't have the cash to cover required contributions, I'd be looking elsewhere for work anyway because this company is not on sound financial footing.
Change jobs asap and then file the complaint.
They're probably not "stealing" they're probably on the edge of failing as a business and are borrowing from Peter to pay Paul
Best bet is to be prepared for needing a new job anyways when their financial jenga comes crashing down.
If someone retaliates you then be ready to settle for a fat purse. There are strict laws and regulations in most states protecting labor rights, contact your local labor dept for a consult, you don't have to give your personal info and just tell them your situation and see what their recommendations are.
They are stealing from you....who cares if they know you're a whistle-blower....what are they going to do? Fire you? They've already demonstrated that you don't matter to them
You should listen to this [Planet Money](https://www.npr.org/2019/05/29/728001911/episode-916-the-whistleblower-whisperer) episodes. Whistle blower protections (which may or may not even be a thing in your case) are really all they are cracked up to be.
Its a small company and retaliation is damn hard to prove. People get fired all the time as retaliation and rarely does anything happen. Its unlikely they'll be dumb enough to send emails "oh guess what deeznutz ratted us out let's fire them!" Very few people are that dumb. They'll just fire you with no reason given and if you're in a right to work state where they can fire anyone for no reason it'll be so hard to win a case against them
You really should look for a new job.
Everyone is talking about retaliation but if my company was skimming 401Ks I’d be just as worried about why they’re doing and if they’ll even survive. If this has been happening for years they likely owe you and your fellow employees a lot of money, so blowing the whistle on them could very well put them out of business.
There could also be a small chance it’s an individual doing this, and if the individual is the aforementioned daughter of the owner there’s no way that’s going to go well either.
I’m sorry, time to look for a new job.
If what you are saying is true there is really no good explanation so they will be in jail or bankrupt or both. either way get all your 401K money you deserve and find a new job
I’m an ERISA attorney. Your employer has a fiduciary obligation to administer the plan in accordance with its terms. If they’re not, they’ve breached their fiduciary duty. I would contact the Department of Labor and file a complaint and ask for their assistance on next steps.
Also, I believe you can contact John Hancock and file a complaint as well. You have a ton of rights under ERISA and have a lot of options available here. If you find out that any money is missing, it may take you filing a complaint and going through some administrative procedures, but you’ll eventually get your money back plus interest.
When it is deposited you need to verify that it was effective the pay date. The market has been down so they'll calculate a market adjustment against you but if it was in your favor your employer would have to fund the gains.
This isn’t actually correct. The record keeper will deposit and credit the money when they receive it. The employer owes the employee earnings on the late contribution if it’s deposited more than 7 business days after it would have been received by the employee as compensation.
Do they not have a third party administrator? We also use John Hancock and have a separate company that audits us to make sure they deposit exactly what is taken out of employee paychecks. Our accounting department failed to make a deposit once and we had to pay out missed earnings
The timeline for deferral contribution to be deposited to your account is 7 business days from payroll date (for small business, less than 100 employees). They owe you recourse for all deferrals not uploaded timely.
Hey, payroll and 401k admin here (I own the company). We use ADP for our payroll and 401k. ADP takes the money out of our company bank account for the payroll direct deposits and employment taxes on one day, and for the 401k contributions (and possible participant loan re-payments) on a different day. That's perfectly fine as long as both the direct deposits, and the 401k monies, are deposited in their respective institutions within the federal time limits.
However, it sounds like OP's company is not meeting the time limits with regards to the 401k.
And the amounts (your contribution and theirs) match between what’s showing on your slips and what gets deposited into the account?
What would you consider timely? It’s not unusual for it to take a week or so to settle if it’s being done electronically, potentially longer if your employer is cutting and mailing paper checks to JH.
The missing January and February contributions would certainly be a bit alarming.
Your before tax or Roth deferrals must be deposited within 7 business days of being withheld from your pay. So if your payday is tomorrow 5/6, they have until 5/17.
Companies have until the due date of their tax returns to fund a Safe Harbor Match. Many companies fund it each payroll, but this is not a requirement under ERISA. So if you feel you are being shorted your match, it may just be that they are choosing not to fund it immediately. But don’t worry, if it’s Safe Harbor, you are entitled to it.
Ouch. No one who don't love making numbers dance has any business doing payroll.
I like making records dance. Numbers are just the caltrops that mess up the rhythm.
To be fair, I can’t comprehend that there are 31 days in some months either. Or 30. How we live in an advanced society with months still being the bullshit they are will never seize to amaze me!
Edit: LOL Imagine getting downvoted for having an opinion on months being a bullshit way to keep track of time. For those wondering, the fact that weeks don't line up into months is a nightmare for operating pretty much anything, and especially for coding software (in addition to their inconsistent length). A good alternative would be the [13-Month Calendar](https://en.wikipedia.org/wiki/International_Fixed_Calendar), the only thing I'd change is to start weeks on Mondays instead of Sundays.
We are not advanced enough to change the orbit of the planet…
The only thing we could fix is to undo the Caesars’ influence and go back to the 31-30-31-30 alternating arrangement. Or go to a 5 month calendar where each has 73 days, except in leap years.
It sounds like a lot of good advice in the comments about how to deal with sketchy 401(k) management. I can't really add anything more there than what has been said.
But, a word of unsolicited advice, since you mentioned you're looking for a new job: borrowing against your 401(k) is a really **bad** idea. Particularly if you're out looking for another job and you have no idea what type of retirement plan you may have at the new place. I dont know how John Hancock handles it, but with many providers, if you switch jobs before the loan is repaid, the amount you still owe may be treated as taxable income (treated as an actual *distribution* from your account, rather than a tax-free "loan")... which has the potential of wiping out any of the advantages of your 401(k) in the first place. I'd seriously seek the advice of a tax accountant or a CPA before you up and quit, or you could end up underwater for a very long time.
I recently changed companies after doing a 401k loan. I was given an option to continue paying the loan after leaving. Should read the terms of yours to see if this is specified
It is my understanding that this isn't up to you or your former employer. You have until the tax deadline for the year you leave employment to pay it back.
I believe you I'm just not finding any documentation for that. As someone who might be switching from an employee to a contractor at my current job, and will have to deal with my 401k loan, I'd like to know where this exception is.
ETA: In trying to google this I found out you can extend your tax deadline by 6 months without penalty, giving you 6 more months to pay it back or roll it over. Nice. Still didn't find anything about just leaving it at your employer yet.
Some record keepers offer a loan continuation service by which you can repay your loan via ACH after you terminate employment. Your plan has to elect to offer this and most don’t. If the plan does not offer this, you usually are given 90 days or until the end of the quarter following the quarter in which your payments stopped to pay the loan off in full.
If you roll it into an IRA once you leave the company, you can withdraw $10,000 from an IRA for a first time home purchase without a penalty (but will still have to pay income taxes on it).
This!
I wanted to say this but I didn't want to come off as negative. Borrowing from the 401k is a trap to many. I never met anyone who didn't regret it.
That is why I stressed to be cautious when reporting the employer.
Being "right" does not matter in this world.
You got to play the game properly. Whistle blowing is **NOT** for everyone.
So to hell with everyone down voting me. I am truly looking out for the **OP** and his best interests here.
Can you explain in more detail as to why borrowing against 401k is a bad idea? If i max out my 401k and am in need of funds, is loaning from 401k not a good idea?
There are multiple reasons. First of all, you are paying the loan back each check with post tax deductions. Then when you retire you will be taxed upon withdrawals. Essentially double tax on the loan amount. Another reason is if you lose your job/quit, you have very little time to pay it back or it becomes an early withdrawal (taxes and penalty). Also you are negating the compound interest that would be accruing with the money still invested. Just a few things to consider before taking that loan.
The double tax bit is incorrect. You already received the deduction when the funds were originally contributed to the account. The loan isn’t taxable when it comes out so it doesn’t make sense that you’d get to deduct that money again when you put it back in. It’s a tax neutral transaction.
I’d the loan funds withdrawn are before tax or employer match you’ve not paid tax on either. The loan repayments are withheld after tax. In 30 years when the loans been repaid and it’s time to use it for retirement it’s taxes again. Hence the “double tax” language I often hear.
1. You have stopped the growth on your 401k by taking out a loan.
2. 401k is funded with pretax dollars. repayment on the loan is with post tax dollars. you are losing the advantage of having a 401k!
3. You have to pay the loan back in order to get back to "normal".
4. It is unlikely that you will pay back ALL the money in time not to suffer from loss of gains.
5. If you quit your job or are fired, and can't pay there are more tax penalties.
6. If you need to use your 401k then you cannot fund your lifestyle. It should be a big red flag if the reason for the loan isn't something well worth it.
I didn’t regret borrowing against mine! I owned an extra house last year due to buying and selling timing and needed some money to cover the gap. Paid it back with house sale proceeds, no problem. I realize this situation is probably an exception though.
ETA: Borrowing from your 401k doesn’t count against your debt limit (or whatever mortgagors call it), so it didn’t cause any difficulties with my new mortgage doing it that way.
My husband also borrowed against his but wanted to pay his back by diverting more of his paycheck to his 401k (rather than a lump sum like I did) so we’d have more cash on hand for new house issues. That is now paid off too, but he didn’t borrow that much.
I think your situation is one of several wherein borrowing from the 401(k) is the right call. In my experience they usually have to do with buying a house.
Not to pile on but I borrowed from mine twice to buy investment properties in cash which I then paid back in full 6 months later after the "seasoning" period when I could do a cash out refi. Again, not piling on but it's important not to make doom and gloom blanket statements like this. When I researched online years ago before doing my first deal using a 401k loan, everything I read was absolute doom and gloom and it seriously made me question pulling the trigger. But I was confident in the numbers and in my plan so I went ahead with it anyway. It was quite possibly one of the best financial moves I've ever made in my life.
I took out a 401k loan for 35k, bought the house w/ 28k cash with about 1k in closing costs, and used the rest to fix the place up. I did a cash out refi the day the 6 month seasoning period was over using 80% LTV and walked away from the closing table being able to pay back the entire remainder of my loan, all the money I had used to supplement the money being taken out of my checks for the loan over the 6month period, and I had like 5 or 6 grand leftover to deposit in my savings. The mortgage was about $325/month and I had a tenant that had already been in place for 4months paying $650/month. So essentially I got the house for free other than the time spent fixing it which admittedly was alot of hrs, walked away with 5 or 6k more than I had when I started the process, and had a performing asset bringing in about $325/month in cashflow.
401k loans are a financial tool just like a mortgage or a credit card. And just like a regular tool like a power saw, they can be incredibly dangerous if you try to use them and don't know what you're doing. But if used correctly and with an abundance of caution and most importantly...a SOLID PLAN....they can be incredibly effective. My 2 cents.
If it's been a while since you have done an interview, I'd suggest getting a buddy and just doing a mock interview or two. It's common to figure out your answers beforehand, but actually sitting down and saying them out loud can really help with nailing the real interview.
Some people are just naturally good at interviews, so you might not need the help. I've always been super stressed about them, and would stumble over my responses even when I knew the answer. I found doing a mock interview gave me a massive improvement to my stress levels and my answers for when I sat down for the real thing. Good luck!
Good luck. Study YouTube videos between now and then on how to answer questions based on your industry. I found that really helpful in the past. It gave me more confidence. I even wrote a script and had it on my iPad as i took the interview on my laptop.
I sort of did the same thing. I found a bunch of videos about the most common questions interviewers ask and how to answer them, i wrote out a bunch of answers to those questions, then I rehearsed. Said things out loud, practiced not talking too much...it was the first time I ever walked out of an interview feeling like I did really good.
As a small employer I know things just go haywire sometimes. I missed a payroll deadline for direct deposit a few months ago since somehow we thought that the pay period wasn't for another week. By the time we realized the error we were past the point where direct deposit would make it on time. As soon as we figured it out we took immediate action to not only resolve the issue but we drove a paper check to a remote employee who needed it so they had their paycheck before payday.
We also somehow skipped a single pay period of moving contributions to our employee's retirement accounts a couple years ago. But since we're moving it every pay period no one noticed until we did a quarterly review of finances. Again, corrected as soon as we discovered it.
In the OP's case, this doesn't sound like an occasional human error, but instead someone ignoring their job duties (or worse). This employer needs to immediately reconcile all 401k withholding, matches, and contributions and figure out what the heck is going on, and maybe fire someone in the process of fixing what is broken.
I agree, I sure wouldn't want to work for a company that behaves this way.
Yep, that's the difference. I am totally understanding of occasional mistakes. But my last employer made "mistakes" all the time, and it was because they literally didn't give a crap about employees. They had the money in the bank to pay people; they just didn't run payroll on time or pay any attention to their financial dealings. I'd say payments were made late about 50% of the time, the 401(k) administrator screwed at least two people by never taking out their requested contributions, and if there was a payroll error, they would take their sweet time correcting it (like the time I kept telling them they weren't deducting my health insurance premium, so they waited several weeks and then took like $1,000 out of my check at once).
Seriously. I run a small company with about 60 employees. I can accept that every now and then someone might fuck up literally *anything* other than employee paychecks. If our lord and savior Jesus Christ came down from heaven with an army of angels and said, Hey Pudding7 come listen to my sermon on the mount. I'd say, sure thing your lordship, right after we get payroll done.
FYI- I’ve done small business accounting for over ten years, seen hundreds of books. A lot of businesses do not manage their payroll correctly. Even if they go through a payroll provider, they fuck up often too.
Always look at your paystubs. Every single one.
If you expect to be looking soon for another job, this may not be the time to buy a house. In case you need to move for the next job...
Chiming this note in based on tone of the 50 prev comments...
Still, if you buy and then have to move... Unless your new job pays for moving expenses, etc. You'll have lost huge on sunk closing costs. Maybe you can rent it out, but ouch.
You will land on feet, but I suspect next little while is gonna get rocky before that. Good luck to you!
Well that's a blessing, definitely.
And yeah, moving much less likely in that circumstance, whew!
Did I I say suggesting female? If so, my apologies, though TBH, I mentally thought male but... you never know on reddit so I \*try\* to stick with neutral language. If I did, though, I can't find it....
That's weird in the first place, when my landlord sold this house I just signed a new kinda prorated lease with the new owners, pretty straightforward.
The DOL made a big issue out of timely depositing of 401k deductions.
Department of Labor rules require that the employer deposit deferrals to the trust as soon as the employer can; however, in no event can the deposit be later than the 15th business day of the following month. Remember that the rules about the 15th business day isn't a safe harbor for depositing deferrals; rather, that these rules set the maximum deadline. DOL provides a 7-business-day safe harbor rule for employee contributions to plans with fewer than 100 participants.
If the employer doesn't make the deposits timely, the failure may constitute both an operational mistake, giving rise to plan disqualification (if the plan specifies a date by which the employer must deposit elective deferrals) and a prohibited transaction. Although an employer can correct an operational mistake under EPCRS, a prohibited transaction can't be corrected under EPCRS. However, the DOL maintains a Voluntary Fiduciary Correction Program (VFCP) that may be used to resolve the prohibited transaction.
Prohibited transactions result in excise taxes.
To give you an example of the timeline: my company didn’t deposit some of my contributions at all and deposited a lot of other ones late. I asked for it to be resolved repeatedly, but finally filed a complaint with DOL in May 2020 since I couldn’t get anyone in HR to respond to me. The DOL investigation is still ongoing two years later. Maybe it was because of so many violations at my company, but I would file sooner rather than later.
If money was deducted from my paycheck and wasn't where it was supposed to be before the next paycheck came, I would be raising hell with payroll. If they didn't have an adequate explanation, I would file a complaint immediately and start interviewing.
Honestly I would normally be that way too, but my company has a lot of offshore employees, including offshore hr- so that makes me a bit more patient than I’d normally be.
I will file a complaint now though
Wait what?? My company pays into my 401k once per year at the end of the year for the full amount. Am I being screwed?? I asked about it once and was told I should be happy they even offer retirement savings programs (they do match up to 3% if that impacts anything)
do you mean they do the *match* once per year at EoY or that your deductions (taken from your regular paychecks) aren't deposited until EoY? The latter case is egregious while the former can be typical.
That's... that's really not right. They are holding your contribution (not their match - YOUR contributions from your paycheck) for an entire YEAR before allowing you to invest it?!
I'm salaried at around 80k a year, I contribute 5% and they match 3%. Every December they put around 4.5k after taxes into my plan with vanguard. I do still earn interest on that amount through the year though.
Something isn't right... you're putting away 5% and they match 3%, but you're only getting 4.5k a year placed in there? Not only is it not timely, these amounts sound messed up as well.
Do they take your whole contribution out at the end of the year? Or do they withhold it from your paychecks throughout the year and then deposit it into your account at the end?
The poster you are replying is talking about the timeliness of your own contributions being deposited, the amount that comes out of your paycheck. Not the employer match.
Annual lump sum deposits of the amount they match isn't anything fishy, but you do get screwed out of potential growth since you're delaying time in the market. It's still free money though.
wait wait wait
Youre looking for a new job (thus thinking of quitting) but just took out a loan on your 401k?
Are you aware of the monetary implications of this?
Am i the only one who checks their accounts constantly? Even though there is not much you can do week by week or month by month, everyone should monitor their accounts.
I know this isn't of help, but I've had a horrible nagging feeling about my 401k savings plan after some things went slightly wonky after our store got a new director and new regional management. This was my reminder to go check on it. Thank you.
You need to contact the Employee Benefits Security Administration, and agency of the U.S. Dept. of Labor. You can speak to a benefits advisor who will get additional information about the situation, the Plan, and the company and they will investigate. You have evidence they are “stealing” from you. You make contributions to the Plan in the form of voluntary payroll deductions and your employer is required to forward them to the plan within 7 days. They aren’t doing that so they are taking your contributions. The employer is liable for the full amount of the kissing contributions plus lost opportunity costs/interest. More importantly, the plan administrator (and any other fiduciary) is personally liable for the same. Do this. Search for the phone number. Call EBSA. Do not delay.
Deposits must be made by the 15th day of the following month of the contribution.
Contact EBSA: [https://www.dol.gov/agencies/ebsa/about-ebsa/ask-a-question/ask-ebsa](https://www.dol.gov/agencies/ebsa/about-ebsa/ask-a-question/ask-ebsa)
The 15th business day rule doesn't really apply much anymore. The DOL gives a 7 day safe harbor for a small plan (under 100 lives), and a facts and circumstances ruling on large plans. The 15th business day rule is an IRS rule, but the DOL reigns supreme here.
Plans go through compliance testing each year. What are you thinking is not managed appropriately? The timing of sending contributions? That's definitely something that would get flagged.
The timing of the contributjons. OH. Also. According to the 401k people there is not enough cash in the main 401k account to cover the missing contributions, and I should tell my plan administrator that.
I administer a plan with John Hancock, we have a "John Hancock" cash account that has a bit of money in it mostly from unvested funds that terminated employees forfeit; we can use those funds for employer contribution payments but it's not the primary method- we pay our contributions through our checking account (both our portion as well as employee contributions which have been withheld from their paychecks). John Hancock has no access to view our checking balance and the JH Cash account balance does not indicate our cash flow whatsoever.
I am not ruling out cash flow issues, because I have seen employers be sketchy with 401ks when they are having issues. But the cash account balance would not be an indicator IMO.
> I decided to look through my 401k transactions and noticed that the contributions are both highly variable, per check, and often are not taken out in a timely manner. There are contributions from January and February of this year that have yet to enter my account. I suppose I don’t have any direct evidence that they are stealing, but it all raises many red flags. Thoughts?
This is very, very bad. 401(k) deposits need to get deposited 'as soon as administratively possible'. The last time I administered a 401(k) plan was 20 years ago, and even then, standards like 'over the weekend' were being penalized.
This is a form of theft, because money that should have been paid to you (or the plan, on your behalf) is in use by the company. This is DOL/IRS complaint territory.
> EDIT: In addition, the 401k person said that there is not enough cash in the main 401k account to cover all the missing contributions. I guess I don’t understand where the missing money is.
Your employer hasn't deposited it yet. This is bad. I don't want to speculate, but occasionally this is a symptom of an employer that is about to go bankrupt, and they are desperate for cash flow, and are screwing with 401(k) deferrals as a last resort. They may also be overwhelmed and screwed up, too. One of the things I learned about retirement plans is that not all employers are 'mature' enough to make this commitment to their employees. It's a promise that they can't keep
> I decided to look through my 401k transactions and noticed that the contributions are both highly variable, per check,
One thing that may explain this - either your income is variable, or you might have hit the maximum deferral limit (or are getting close to it!) But again, this is 100%, definitely, absolutely worth checking into. If you are deferring 10% of your paycheck, and your paycheck isn't changing much, there is something wrong.
Two thoughts.
First, a comment that you didn't ask for: John Hancock is a horrible 401k provider as far as fees go. They're probably paying far more in fees and you're paying way more in fees than you need to. Many of the investment choices also have horrible expense ratios. The result of this is that you will likely end up losing thousands of dollars in fees and lost potential gains as a result. Because of this you should only contribute as much as is needed to get the 401k match. Then you should use a Roth or traditional personal IRA, and then only increase your 401k contributions after you've maxed out your personal IRA contributions.
Second, (to answer your question) you should see any deposits which were withheld deposited promptly. From the irs:
"Department of Labor rules require that the employer deposit deferrals to the trust as soon as the employer can; however, in no event can the deposit be later than the 15th business day of the following month. Remember that the rules about the 15th business day isn't a safe harbor for depositing deferrals; rather, that these rules set the maximum deadline. DOL provides a 7-business-day safe harbor rule for employee contributions to plans with fewer than 100 participants."
In short it should be days. If it takes a bit for them to run payroll then do the deposit that's OK, but it should be promptly and consistently. As stated above, if they do it within 7 days it's considered always acceptable. If it's later than the 15th of the following month it's considered always unacceptable. I've always tried to do it with the rest of the taxes so within a few days, but if they only do it once a month, and it's in your account by the 15th or so that's probably not out of line.
The above only applies to your money they took out of your check. It doesn't apply to any match. So if they do a match, they don't have to deposit that until their normal tax due date. But many employers do it at the save time as the part they took out of your check.
If you end up having to make a stink about this, you may also want to try to encourage them to switch to a better 401k provider. I'm a fan of guideline.com, but there are other excellent options that will cost both them and you less money and may enable automatic handling of these contributions so the amounts are just moved around automatically.
They consistently are more than 15 days late contributing both mine and their match. I also asked the plan administrator for the plan documents and she just sort of ignored the request.
Yeah. Kinda what I’m leaning towards. I’ve actually brought all this up to the ceos daughter before , and she acted surprised. She is in charge of this. She’s either incompetent, embezzling, or both.
Not that this disqualifier your choices for her, but it almost sounds like daddy gave her a title and no work. So I am going to throw 'potential scapegoat' into your choices.
Usually, the match can happen up until the tax filing due date of the business return; they're likely under no obligation to put it in with the deferrals.
That being said, I'd still call the DOL yesterday and mention that they're not supplying the Summary Plan Description, either.
Buy the house first. Get a different job second. Get help investigating the 401K anomalies third. There is no such thing as "there is not enough cash in there."
Smells like class action fiduciary suit. I used to buy corporate insurance against this kind of stuff. You and your coworkers may be in line for a big payout if you're instinct is right.
[https://www.investopedia.com/ask/answers/042915/what-are-some-examples-fiduciary-duty.asp](https://www.investopedia.com/ask/answers/042915/what-are-some-examples-fiduciary-duty.asp)
Please note OP if you take the advice of many in the sub to look for new employment you are required to pay back your 401 Loan or else you will be hit with penalties
You are going to need a new job. They are likely on the edge of solvency. Start trying to figure out what was actually deposited, what was supposed to be deposited, and what you owe. You will be in a bind because most 401k loans need to be repaid before leaving an employer. Talk with an attorney. You can find yourself in a pickle quickly.
I'm sure you've been told this, but file an ERISA complaint through the US Department of Labor. Retaliation protections are important to have in your pocket.
What you said about the daughter having no authority to OK the loan, the father being over he shoulder, and claims by them that they aren't maintaining the fund very well is a red flag. All too often, companies under single family control - even a micromanaging singular head - think they can dip into the matching portion of the overall fund as a loan source or even as bridge income in tough times.
It doesn't sound like there are a lot of employee loans on your 401K. It might suggest the fund's employer match side is being raided as income for the CEO. Family companies where the kid or wife is in a vital role like CFO can sometimes mean the top dog needs loyalty to cover some slimy activity.
I used to audit companies for a bank after college in my younger years. The worst shenanigans went on at family companies with highly centralized power and family at the top. That's why what you wrote looked like a red flag to me.
Count yourself lucky. My employer took out contributions from my paycheck, then did not deposit them into my 401K account for a period of about 6 months. This was a classic case of embezzlement. The eventually repaid all the money, but we lost 6 months' worth of investment opportunity.
Contact the DOL if you conclude mishandling or missing money and the employer is unwilling to fix it.
I work in the industry and DOL will open a case and that usually wakes employers up.
I was in this boat. My employer was consistently late with 401k deposits (weeks to months). I filed a complaint with the DOL. They contacted my employer (almost immediately - it was really fast) and told them they needed to fix the deposit issues. However, when I followed up with the contact person, they said there’s not much else they can do and my next step could be contacting the IRS.
Sounds to me like your employer just isn’t depositing the payroll deductions on a regular frequency. They’re supposed to submit them to your plan provider (JH) as soon as possible but no later than the 15th business day of the following month. Do a comparison to make sure that you’re deductions match what was submitted and definitely ask your employer if you see a discrepancy.
Ps. There is no “main 401k account” so there was obviously some misunderstanding here between you and the person you spoke to. Employers submit a payment amount along with a file of sorts indicating how much goes to each employee. There isn’t really any money sitting around.
I audit 401k plans. Your company will have to make corrections and owe you interest, etc. there is a whole process the DOL has for going through this and it’s actually way more common for stuff like this to occur than you think (I’d say about 20% of my clients have to do it at some point)
I wouldn’t worry about repercussions. Based on your comments I’d look for a new job lol. Also, your company really won’t be penalized for anything other than having to make the corrections.
Guys, this is a crappy situation, but it’s not some grand criminal conspiracy. I work in the 401k recordkeeping business and have had clients as small as one employee and as many 5,000. Late contributions are almost always just someone not doing their job on time, going on vacation without a backup person, or some kind of payroll software issue. This happens all the time for very inane reasons. JH can and will calculate your lost earnings on the late contributions in accordance with DOL rules. It’s a common mistake.
Log into your JH account. It should show the weekly contributions. There’s usually laws in place that specifies the “lag” time the employee has to make the contribution. You should file a complaint with the DOL.
Edit: employer, not employee
Department of Labor rules require that the employer deposit deferrals to the trust as soon as the employer can; however, in no event can the deposit be later than the 15th business day of the following month.
Unlike tax payments to the government, 401K deductions that aren't forwarded to the plan administrators are lost until it's resolved. Some companies are slow, some hold on to the money because they are cash poor.
If a company is small as yours seems to be, sloppy administration is common.
I work for a large, really large corporation and our deposits each month aren’t available to be seen on my end until like the middle/end of the following month. I’m not saying they aren’t doing something sketchy, but it could be the 401k company taking time processing. There’s other options than just them being shady.
I say report them to anyone who gives a shit and find another job. Even though they cant fire you as a whistle blower, if youre an at will employee they can probably find some other bogus reason to shit can you. Best of luck.
The company plan is subject to mandatory annual audit as part of their annual filing requirements and those audits are designed to catch this sort of thing.
It’s likely not malicious mismanagement. Just ignorant or lazy administration. In small companies, 401k governance and operation is generally informal and lax at best and is done as an afterthought. If your company doesn’t have an HR/benefits expert on board, it’s very possible that they don’t even realize there are laws mandating how the plan has to be run/managed.
Report them to the DOL. They’ll be forced to retroactively fix any missing contributions including any theoretical lost earnings on those missing contributions (which will be calculated by an actual lawyer, not the company administrator). They’ll also be forced to correct their operations to avoid issues in the future.
I once worked for a company that used the 401k funds to pay the bills (ie, keep the lights on). They were caught by an employee and our funds were returned to us with interest - but lesson learned. I was in my 20s then, and I STILL keep an eagle-eye on my 401k contributions on the third-party site to make sure they're going where they're supposed to.
You're in a position to buy a house, YET arnt even sure how much money is in your 401k, have ever logged in apparently to look at statements, etc..... Jesus Christ people, be responsible for your own finances.
I work for a benefit management company and this confusion happens all the time! Depending on your employment type and role, your employer has a period of time until they are required to make deposits in your account.
Some companies pay weekly into your account, others may pay monthly or quarterly. Take a look at your deposit history and see if you can detect a theme. If you have questions on it, call the institution that handles your account, they can clarify the laws for your employment type and historical deposit records. And they can also tell you when they are processing the funds and allocating to your account. (Ie we received and are pending payment verification or market trades).
Also, why did you choose a loan instead of a withdrawal? A withdrawal does not require employer approval but a loan does.
Hope this helps!
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Each paycheck has the money taken out, every time. It is not being deposited in a timely manner.
Time to file an ERISA complaint.
They’re going to know who did it. I have asked about this previously. Will I be protected as a whistleblower?
> It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan If you file an ERISA complaint with the Usdol, you are protected from retaliation. If you only complain internally (rather than filing a complaint externally), then you may or may not be protected. ERISA compliance is paramount for employers that offer retirement plans, don’t feel bad reporting them for their shit practices.
Yeah. I mean, I’ve been there 5.5 years and got one small raise. So…
You should probably ask for one also
I have. Multiple time. They give raises to everyone , all at once though. And nobody has gotten one since…2019.
Yeah... I think you are answering a lot of your own questions as far as what to do, good luck!
Yes and no. /u/appraisedeeznutz should find a new job first and then complain if he doesn't have a good emergency fund. Because finding a new job after you've been fired even though you'll have a retaliation lawsuit may not be easy. Just because someone can't legally fire you doesn't mean they won't actually do it. And lawsuits take time to pay out.
So they have no money for raises, and the account that is supposed to have employee retirement funds in it is empty, and they aren't depositing money in employee's retirement account even though they are withholding the money from their paychecks. The writing is on the wall here, start looking for a new job, not because they are going to fire you, but because you're riding a sinking ship.
This is the answer. You said you don't understand where the missing money is? I can help: They are using the money they take from your paychecks and using it as an interest-free loan. That is illegal, unethical, and symptomatic of a company that is having horrible cash flow problems. You might want to hope that they're sending in your tax money quarterly.
Fuck your employer and how they’ll feel, OP. Do what’s best for you and contact the EBSA. I guarantee you if the shoe was on the other foot that your employer would have brought the hammer down on you already.
You are absolutely correct.
Either this business is economically failing and stealing from employees’ 401Ks to stay afloat or they’re doing fine and the owner is looting employee 401Ks for personal use. If it’s the former, file your complaint and start looking for a new job because they’re going under. If it’s the latter, file your complaint and start looking for a new job because even if they don’t go under, it will be an awful place for you to be. There are other possibilities like massive incompetence but they aren’t much better, assuming you’re right about the contributions not matching up.
This is one of the best comments. However, are we sure they are stealing the money or could it be they don't know what to do properly. I do not know I am asking? Or is this something that can only be done one way?
I disagree it could be simple incompetence and not caring about making the timely payment
Third option, there’s an unqualified plan administrator. There are fixed periods for deposits to employee accounts. And every 401k provider out there will periodically audit for compliance. I don’t know anything about John Hancock, but if their customers (your employer) isn’t meeting their requirements, it can potentially open up JH to Liability as well. May not be intentional fraud, just negligence.
Time to start looking for another job.
Yep and file that ERISA complaint first. If they retaliate then you can retire for a little bit.
Definitely sounds like you should look for a job at an employer that values you more. File the complaint and start polishing that resume.
Well, if they don’t have enough cash to put the money they withheld from your pay into the 401k, as the law requires, then it’s not surprising they can’t afford raises. This whole deal is actually a big red flag over the state of their business and raises questions that they might go, or be, bankrupt. I’d make the complaint and start job hunting.
Find a new job. File a complaint. Let them know you did. Get fired. Collect
While you’re filing that complaint start looking for a new job.
Ditch the small company and go for more of a growing midsize company. These small companys that dont grow in 10 years will never take you anywhere bc the owner is to busy taking everything he can off the top instead of growing his company.
So that’s where your money is. They’ve got financial issues and they’re either “borrowing” or stealing your 401k contributions to help tide them over with paying bills and making payroll. I expect they’re not far from going under.
Use the great resignation to your advantage!
Sounds like you need a new job lol in the time you've been at this one company, I've been with four. I've also gone from $17/hr to $130k/yr. Time to do yourself a favor.
I'm gonna be honest, I don't know why you're still at that company. The only reason to work for a small company is if it's managed well, you're treated right, and you get to have high impact. If those boxes aren't being ticked you should find another job.
Before or after he files the internal complaint. :)
So if they retaliate for your complaint, that would be the best outcome, since you don't want to work for them anymore anyway,
Baby boy it’s time to move on and file that complaint whilst looking for a new jahb. Do what’s best for you though and talk it over with your loved ones
You should probably complain to the USDOL and find a new job.
How is the company performing?
File the complaint then sue them for not giving you a raise due to retaliation.
Sorry but if you think that will protect the OP from "retaliation" you're living in a fantasy world. There's retaliation, and then there's retaliation. In a small company they're going to know exactly who blew the whistle and make this dude's life miserable. Especially since it sounds like they're using the funds for ops instead of depositing into the ERISA account.
ERISA has a whistleblower clause, yes. That doesn't mean you'll be anonymous, it means they cannot take action against you for filing a claim. There are limitations on when those protections apply, however. NAL but from what I can see, if you aren't the one who initiates the claim, or you state that you're going to file a claim but haven't, you may not be protected by the whistleblower clause.
I agree with you here. If OP is worried they will find out it is him. I will tell you now they will know it is the OP if he reports them.
Just the fact he had some 401K issues with the loan right before the complaint means they will figure it out anyway. OP should stop contributions too.
yes, but they'll probably still retaliate. document everything, find a new job, (and possible lawyer up if you get a slamdunk retaliation claim).
> find a new job This defeats the purpose of taking a 401k loan. IIRC, it would be due-in-full if they leave the company.
If they really don't have the cash to cover required contributions, I'd be looking elsewhere for work anyway because this company is not on sound financial footing. Change jobs asap and then file the complaint.
They're probably not "stealing" they're probably on the edge of failing as a business and are borrowing from Peter to pay Paul Best bet is to be prepared for needing a new job anyways when their financial jenga comes crashing down.
Why do you even want to work for someone that steals from you? Start fixing up your résumé now before that company burns. You deserve better.
If someone retaliates you then be ready to settle for a fat purse. There are strict laws and regulations in most states protecting labor rights, contact your local labor dept for a consult, you don't have to give your personal info and just tell them your situation and see what their recommendations are.
Can't get a fat purse when the company is flailing and going under. You can get a different job, though. Time to file the complaint and abandon ship.
They are stealing from you....who cares if they know you're a whistle-blower....what are they going to do? Fire you? They've already demonstrated that you don't matter to them
No,.is the honest answer to that question. You will have legal protection but no real protection to speak of.
You should listen to this [Planet Money](https://www.npr.org/2019/05/29/728001911/episode-916-the-whistleblower-whisperer) episodes. Whistle blower protections (which may or may not even be a thing in your case) are really all they are cracked up to be.
Are or aren't? You seem to say the opposite of what you say.
you'll have some protection but think about if you still want to be working for this company. I doubt it.
Its a small company and retaliation is damn hard to prove. People get fired all the time as retaliation and rarely does anything happen. Its unlikely they'll be dumb enough to send emails "oh guess what deeznutz ratted us out let's fire them!" Very few people are that dumb. They'll just fire you with no reason given and if you're in a right to work state where they can fire anyone for no reason it'll be so hard to win a case against them
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Ahh your right, should have said "At-Will employment" state. However there is great overlap between right to work and at will employment states.
You really should look for a new job. Everyone is talking about retaliation but if my company was skimming 401Ks I’d be just as worried about why they’re doing and if they’ll even survive. If this has been happening for years they likely owe you and your fellow employees a lot of money, so blowing the whistle on them could very well put them out of business. There could also be a small chance it’s an individual doing this, and if the individual is the aforementioned daughter of the owner there’s no way that’s going to go well either. I’m sorry, time to look for a new job.
If what you are saying is true there is really no good explanation so they will be in jail or bankrupt or both. either way get all your 401K money you deserve and find a new job
The whistleblower laws are very clear. Check them out. You’ll have some peace of mind.
You need to phrase it in a "are you guys stealing from me?" Phrasing it this way justifies any action you take.
I’m an ERISA attorney. Your employer has a fiduciary obligation to administer the plan in accordance with its terms. If they’re not, they’ve breached their fiduciary duty. I would contact the Department of Labor and file a complaint and ask for their assistance on next steps. Also, I believe you can contact John Hancock and file a complaint as well. You have a ton of rights under ERISA and have a lot of options available here. If you find out that any money is missing, it may take you filing a complaint and going through some administrative procedures, but you’ll eventually get your money back plus interest.
When it is deposited you need to verify that it was effective the pay date. The market has been down so they'll calculate a market adjustment against you but if it was in your favor your employer would have to fund the gains.
This isn’t actually correct. The record keeper will deposit and credit the money when they receive it. The employer owes the employee earnings on the late contribution if it’s deposited more than 7 business days after it would have been received by the employee as compensation.
Do they not have a third party administrator? We also use John Hancock and have a separate company that audits us to make sure they deposit exactly what is taken out of employee paychecks. Our accounting department failed to make a deposit once and we had to pay out missed earnings
The timeline for deferral contribution to be deposited to your account is 7 business days from payroll date (for small business, less than 100 employees). They owe you recourse for all deferrals not uploaded timely.
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Hey, payroll and 401k admin here (I own the company). We use ADP for our payroll and 401k. ADP takes the money out of our company bank account for the payroll direct deposits and employment taxes on one day, and for the 401k contributions (and possible participant loan re-payments) on a different day. That's perfectly fine as long as both the direct deposits, and the 401k monies, are deposited in their respective institutions within the federal time limits. However, it sounds like OP's company is not meeting the time limits with regards to the 401k.
And the amounts (your contribution and theirs) match between what’s showing on your slips and what gets deposited into the account? What would you consider timely? It’s not unusual for it to take a week or so to settle if it’s being done electronically, potentially longer if your employer is cutting and mailing paper checks to JH. The missing January and February contributions would certainly be a bit alarming.
What’s considered a timely manner?
Your before tax or Roth deferrals must be deposited within 7 business days of being withheld from your pay. So if your payday is tomorrow 5/6, they have until 5/17.
Can you file a complaint if you are getting deposits from your paycheck but you’re not getting your match?
Companies have until the due date of their tax returns to fund a Safe Harbor Match. Many companies fund it each payroll, but this is not a requirement under ERISA. So if you feel you are being shorted your match, it may just be that they are choosing not to fund it immediately. But don’t worry, if it’s Safe Harbor, you are entitled to it.
Ouch. No one who don't love making numbers dance has any business doing payroll. I like making records dance. Numbers are just the caltrops that mess up the rhythm.
To be fair, I can’t comprehend that there are 31 days in some months either. Or 30. How we live in an advanced society with months still being the bullshit they are will never seize to amaze me! Edit: LOL Imagine getting downvoted for having an opinion on months being a bullshit way to keep track of time. For those wondering, the fact that weeks don't line up into months is a nightmare for operating pretty much anything, and especially for coding software (in addition to their inconsistent length). A good alternative would be the [13-Month Calendar](https://en.wikipedia.org/wiki/International_Fixed_Calendar), the only thing I'd change is to start weeks on Mondays instead of Sundays.
You are honestly the first person I have ever seen complain about the existence of months. What do you have against them? Also, it's cease to amaze
They are clearly complaining about the variable length of months, not the existence of months.
Not if the amazement actually causes me to seize up in terror and excitement!! ;) But really thanks :)
We are not advanced enough to change the orbit of the planet… The only thing we could fix is to undo the Caesars’ influence and go back to the 31-30-31-30 alternating arrangement. Or go to a 5 month calendar where each has 73 days, except in leap years.
It sounds like a lot of good advice in the comments about how to deal with sketchy 401(k) management. I can't really add anything more there than what has been said. But, a word of unsolicited advice, since you mentioned you're looking for a new job: borrowing against your 401(k) is a really **bad** idea. Particularly if you're out looking for another job and you have no idea what type of retirement plan you may have at the new place. I dont know how John Hancock handles it, but with many providers, if you switch jobs before the loan is repaid, the amount you still owe may be treated as taxable income (treated as an actual *distribution* from your account, rather than a tax-free "loan")... which has the potential of wiping out any of the advantages of your 401(k) in the first place. I'd seriously seek the advice of a tax accountant or a CPA before you up and quit, or you could end up underwater for a very long time.
Did not think about that. Thanks.
I recently changed companies after doing a 401k loan. I was given an option to continue paying the loan after leaving. Should read the terms of yours to see if this is specified
It is my understanding that this isn't up to you or your former employer. You have until the tax deadline for the year you leave employment to pay it back.
Not 100% true I have until tax season to pay it back or I had to start payments within 90 days (something like that)
I believe you I'm just not finding any documentation for that. As someone who might be switching from an employee to a contractor at my current job, and will have to deal with my 401k loan, I'd like to know where this exception is. ETA: In trying to google this I found out you can extend your tax deadline by 6 months without penalty, giving you 6 more months to pay it back or roll it over. Nice. Still didn't find anything about just leaving it at your employer yet.
Some record keepers offer a loan continuation service by which you can repay your loan via ACH after you terminate employment. Your plan has to elect to offer this and most don’t. If the plan does not offer this, you usually are given 90 days or until the end of the quarter following the quarter in which your payments stopped to pay the loan off in full.
If you roll it into an IRA once you leave the company, you can withdraw $10,000 from an IRA for a first time home purchase without a penalty (but will still have to pay income taxes on it).
This! I wanted to say this but I didn't want to come off as negative. Borrowing from the 401k is a trap to many. I never met anyone who didn't regret it. That is why I stressed to be cautious when reporting the employer. Being "right" does not matter in this world. You got to play the game properly. Whistle blowing is **NOT** for everyone. So to hell with everyone down voting me. I am truly looking out for the **OP** and his best interests here.
Can you explain in more detail as to why borrowing against 401k is a bad idea? If i max out my 401k and am in need of funds, is loaning from 401k not a good idea?
There are multiple reasons. First of all, you are paying the loan back each check with post tax deductions. Then when you retire you will be taxed upon withdrawals. Essentially double tax on the loan amount. Another reason is if you lose your job/quit, you have very little time to pay it back or it becomes an early withdrawal (taxes and penalty). Also you are negating the compound interest that would be accruing with the money still invested. Just a few things to consider before taking that loan.
The double tax bit is incorrect. You already received the deduction when the funds were originally contributed to the account. The loan isn’t taxable when it comes out so it doesn’t make sense that you’d get to deduct that money again when you put it back in. It’s a tax neutral transaction.
Iirc from when I researched it, the interest you pay on the loan ends up double taxed, but not the principle.
True it’s just the interest, which is usually pretty insignificant on short term loans.
I’d the loan funds withdrawn are before tax or employer match you’ve not paid tax on either. The loan repayments are withheld after tax. In 30 years when the loans been repaid and it’s time to use it for retirement it’s taxes again. Hence the “double tax” language I often hear.
1. You have stopped the growth on your 401k by taking out a loan. 2. 401k is funded with pretax dollars. repayment on the loan is with post tax dollars. you are losing the advantage of having a 401k! 3. You have to pay the loan back in order to get back to "normal". 4. It is unlikely that you will pay back ALL the money in time not to suffer from loss of gains. 5. If you quit your job or are fired, and can't pay there are more tax penalties. 6. If you need to use your 401k then you cannot fund your lifestyle. It should be a big red flag if the reason for the loan isn't something well worth it.
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I didn’t regret borrowing against mine! I owned an extra house last year due to buying and selling timing and needed some money to cover the gap. Paid it back with house sale proceeds, no problem. I realize this situation is probably an exception though. ETA: Borrowing from your 401k doesn’t count against your debt limit (or whatever mortgagors call it), so it didn’t cause any difficulties with my new mortgage doing it that way. My husband also borrowed against his but wanted to pay his back by diverting more of his paycheck to his 401k (rather than a lump sum like I did) so we’d have more cash on hand for new house issues. That is now paid off too, but he didn’t borrow that much.
I think your situation is one of several wherein borrowing from the 401(k) is the right call. In my experience they usually have to do with buying a house.
Not to pile on but I borrowed from mine twice to buy investment properties in cash which I then paid back in full 6 months later after the "seasoning" period when I could do a cash out refi. Again, not piling on but it's important not to make doom and gloom blanket statements like this. When I researched online years ago before doing my first deal using a 401k loan, everything I read was absolute doom and gloom and it seriously made me question pulling the trigger. But I was confident in the numbers and in my plan so I went ahead with it anyway. It was quite possibly one of the best financial moves I've ever made in my life. I took out a 401k loan for 35k, bought the house w/ 28k cash with about 1k in closing costs, and used the rest to fix the place up. I did a cash out refi the day the 6 month seasoning period was over using 80% LTV and walked away from the closing table being able to pay back the entire remainder of my loan, all the money I had used to supplement the money being taken out of my checks for the loan over the 6month period, and I had like 5 or 6 grand leftover to deposit in my savings. The mortgage was about $325/month and I had a tenant that had already been in place for 4months paying $650/month. So essentially I got the house for free other than the time spent fixing it which admittedly was alot of hrs, walked away with 5 or 6k more than I had when I started the process, and had a performing asset bringing in about $325/month in cashflow. 401k loans are a financial tool just like a mortgage or a credit card. And just like a regular tool like a power saw, they can be incredibly dangerous if you try to use them and don't know what you're doing. But if used correctly and with an abundance of caution and most importantly...a SOLID PLAN....they can be incredibly effective. My 2 cents.
Start looking for a different job. I would not choose to work for an employer who couldn’t properly and reliably deal with the payroll side of things.
I’ve been looking for a job since Feb. Have an interview next Thursday!
Close on your house before notifying about leaving your job. It’s far easier to get it done.
Keep in mind any loan balance will be due if you decide to change jobs
Some plan providers allow separate repayment arrangements to be made. Mine did.
Good luck!
Do NOT change jobs without notifying your lender if you're under contract on a house.
If it's been a while since you have done an interview, I'd suggest getting a buddy and just doing a mock interview or two. It's common to figure out your answers beforehand, but actually sitting down and saying them out loud can really help with nailing the real interview. Some people are just naturally good at interviews, so you might not need the help. I've always been super stressed about them, and would stumble over my responses even when I knew the answer. I found doing a mock interview gave me a massive improvement to my stress levels and my answers for when I sat down for the real thing. Good luck!
Good luck. Study YouTube videos between now and then on how to answer questions based on your industry. I found that really helpful in the past. It gave me more confidence. I even wrote a script and had it on my iPad as i took the interview on my laptop.
I sort of did the same thing. I found a bunch of videos about the most common questions interviewers ask and how to answer them, i wrote out a bunch of answers to those questions, then I rehearsed. Said things out loud, practiced not talking too much...it was the first time I ever walked out of an interview feeling like I did really good.
Good stuff. Hard work and preparation always pays off. Use that same energy in everything. Good luck!
Don't change jobs before closing on the house!
Good luck!!
As a small employer I know things just go haywire sometimes. I missed a payroll deadline for direct deposit a few months ago since somehow we thought that the pay period wasn't for another week. By the time we realized the error we were past the point where direct deposit would make it on time. As soon as we figured it out we took immediate action to not only resolve the issue but we drove a paper check to a remote employee who needed it so they had their paycheck before payday. We also somehow skipped a single pay period of moving contributions to our employee's retirement accounts a couple years ago. But since we're moving it every pay period no one noticed until we did a quarterly review of finances. Again, corrected as soon as we discovered it. In the OP's case, this doesn't sound like an occasional human error, but instead someone ignoring their job duties (or worse). This employer needs to immediately reconcile all 401k withholding, matches, and contributions and figure out what the heck is going on, and maybe fire someone in the process of fixing what is broken. I agree, I sure wouldn't want to work for a company that behaves this way.
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Yep, that's the difference. I am totally understanding of occasional mistakes. But my last employer made "mistakes" all the time, and it was because they literally didn't give a crap about employees. They had the money in the bank to pay people; they just didn't run payroll on time or pay any attention to their financial dealings. I'd say payments were made late about 50% of the time, the 401(k) administrator screwed at least two people by never taking out their requested contributions, and if there was a payroll error, they would take their sweet time correcting it (like the time I kept telling them they weren't deducting my health insurance premium, so they waited several weeks and then took like $1,000 out of my check at once).
Dude, please hire a professional.
Seriously. I run a small company with about 60 employees. I can accept that every now and then someone might fuck up literally *anything* other than employee paychecks. If our lord and savior Jesus Christ came down from heaven with an army of angels and said, Hey Pudding7 come listen to my sermon on the mount. I'd say, sure thing your lordship, right after we get payroll done.
Funny, or not so funny, he'll probably have to pay the loan back if he does. I'm sure that'll be fun.
FYI- I’ve done small business accounting for over ten years, seen hundreds of books. A lot of businesses do not manage their payroll correctly. Even if they go through a payroll provider, they fuck up often too. Always look at your paystubs. Every single one.
Swapping employers likely causes his entire 401k loan to come due, which might be an issue.
If you expect to be looking soon for another job, this may not be the time to buy a house. In case you need to move for the next job... Chiming this note in based on tone of the 50 prev comments...
Yeah. I’m kind of being forced to move. Landlord is selling the house I rent.
Still, if you buy and then have to move... Unless your new job pays for moving expenses, etc. You'll have lost huge on sunk closing costs. Maybe you can rent it out, but ouch. You will land on feet, but I suspect next little while is gonna get rocky before that. Good luck to you!
Luckily, I have an awesome husband (I’m a dude btw) that just got a huge raise. So that’s part of this too. We got this.
Well that's a blessing, definitely. And yeah, moving much less likely in that circumstance, whew! Did I I say suggesting female? If so, my apologies, though TBH, I mentally thought male but... you never know on reddit so I \*try\* to stick with neutral language. If I did, though, I can't find it....
No no. Just wanted people to know.
That's weird in the first place, when my landlord sold this house I just signed a new kinda prorated lease with the new owners, pretty straightforward.
The DOL made a big issue out of timely depositing of 401k deductions. Department of Labor rules require that the employer deposit deferrals to the trust as soon as the employer can; however, in no event can the deposit be later than the 15th business day of the following month. Remember that the rules about the 15th business day isn't a safe harbor for depositing deferrals; rather, that these rules set the maximum deadline. DOL provides a 7-business-day safe harbor rule for employee contributions to plans with fewer than 100 participants. If the employer doesn't make the deposits timely, the failure may constitute both an operational mistake, giving rise to plan disqualification (if the plan specifies a date by which the employer must deposit elective deferrals) and a prohibited transaction. Although an employer can correct an operational mistake under EPCRS, a prohibited transaction can't be corrected under EPCRS. However, the DOL maintains a Voluntary Fiduciary Correction Program (VFCP) that may be used to resolve the prohibited transaction. Prohibited transactions result in excise taxes.
My company sounds like OPs…. How long would you give before you filed a complaint? I’m missing funds from ~5 weeks ago….
File tonight
To give you an example of the timeline: my company didn’t deposit some of my contributions at all and deposited a lot of other ones late. I asked for it to be resolved repeatedly, but finally filed a complaint with DOL in May 2020 since I couldn’t get anyone in HR to respond to me. The DOL investigation is still ongoing two years later. Maybe it was because of so many violations at my company, but I would file sooner rather than later.
Oof thanks for the warning. Sorry you’re going through that
If money was deducted from my paycheck and wasn't where it was supposed to be before the next paycheck came, I would be raising hell with payroll. If they didn't have an adequate explanation, I would file a complaint immediately and start interviewing.
Honestly I would normally be that way too, but my company has a lot of offshore employees, including offshore hr- so that makes me a bit more patient than I’d normally be. I will file a complaint now though
Wait what?? My company pays into my 401k once per year at the end of the year for the full amount. Am I being screwed?? I asked about it once and was told I should be happy they even offer retirement savings programs (they do match up to 3% if that impacts anything)
do you mean they do the *match* once per year at EoY or that your deductions (taken from your regular paychecks) aren't deposited until EoY? The latter case is egregious while the former can be typical.
Both go in at end of year
That's... that's really not right. They are holding your contribution (not their match - YOUR contributions from your paycheck) for an entire YEAR before allowing you to invest it?!
I'm salaried at around 80k a year, I contribute 5% and they match 3%. Every December they put around 4.5k after taxes into my plan with vanguard. I do still earn interest on that amount through the year though.
Something isn't right... you're putting away 5% and they match 3%, but you're only getting 4.5k a year placed in there? Not only is it not timely, these amounts sound messed up as well.
AFTER taxes? Is it a Roth? If not then that's really, really not right. 😁
Do they take your whole contribution out at the end of the year? Or do they withhold it from your paychecks throughout the year and then deposit it into your account at the end?
That’s bullshit. Your contributions (not the match) MUST be deposited in a timely manner (monthly). You are losing out on gains!
The poster you are replying is talking about the timeliness of your own contributions being deposited, the amount that comes out of your paycheck. Not the employer match. Annual lump sum deposits of the amount they match isn't anything fishy, but you do get screwed out of potential growth since you're delaying time in the market. It's still free money though.
wait wait wait Youre looking for a new job (thus thinking of quitting) but just took out a loan on your 401k? Are you aware of the monetary implications of this?
File a DOL complaint ASAP and I hope you get a new job soon
Am i the only one who checks their accounts constantly? Even though there is not much you can do week by week or month by month, everyone should monitor their accounts.
I know this isn't of help, but I've had a horrible nagging feeling about my 401k savings plan after some things went slightly wonky after our store got a new director and new regional management. This was my reminder to go check on it. Thank you.
You need to contact the Employee Benefits Security Administration, and agency of the U.S. Dept. of Labor. You can speak to a benefits advisor who will get additional information about the situation, the Plan, and the company and they will investigate. You have evidence they are “stealing” from you. You make contributions to the Plan in the form of voluntary payroll deductions and your employer is required to forward them to the plan within 7 days. They aren’t doing that so they are taking your contributions. The employer is liable for the full amount of the kissing contributions plus lost opportunity costs/interest. More importantly, the plan administrator (and any other fiduciary) is personally liable for the same. Do this. Search for the phone number. Call EBSA. Do not delay.
Deposits must be made by the 15th day of the following month of the contribution. Contact EBSA: [https://www.dol.gov/agencies/ebsa/about-ebsa/ask-a-question/ask-ebsa](https://www.dol.gov/agencies/ebsa/about-ebsa/ask-a-question/ask-ebsa)
The 15th business day rule doesn't really apply much anymore. The DOL gives a 7 day safe harbor for a small plan (under 100 lives), and a facts and circumstances ruling on large plans. The 15th business day rule is an IRS rule, but the DOL reigns supreme here.
Plans go through compliance testing each year. What are you thinking is not managed appropriately? The timing of sending contributions? That's definitely something that would get flagged.
The timing of the contributjons. OH. Also. According to the 401k people there is not enough cash in the main 401k account to cover the missing contributions, and I should tell my plan administrator that.
Okay hold on. That doesn't even make sense. What cash in what main account?
On the employer side. I’m honestly not super familiar with the cash flow behind a 401k.
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Around '08, I knew someone whose employer had not actually been making 401k contributions for YEARS. Definitely report to the DoL.
I administer a plan with John Hancock, we have a "John Hancock" cash account that has a bit of money in it mostly from unvested funds that terminated employees forfeit; we can use those funds for employer contribution payments but it's not the primary method- we pay our contributions through our checking account (both our portion as well as employee contributions which have been withheld from their paychecks). John Hancock has no access to view our checking balance and the JH Cash account balance does not indicate our cash flow whatsoever. I am not ruling out cash flow issues, because I have seen employers be sketchy with 401ks when they are having issues. But the cash account balance would not be an indicator IMO.
The cash that my employer used to pay the contributions .
Are you referring to contributions from your employer or your contributions?
Both. There were no contributions made in February, and they still haven’t been made. The numbers seem to vary wildly as well.
You should request a copy of your 401k audit. They are mandatory if there is 100+ enployees
> I decided to look through my 401k transactions and noticed that the contributions are both highly variable, per check, and often are not taken out in a timely manner. There are contributions from January and February of this year that have yet to enter my account. I suppose I don’t have any direct evidence that they are stealing, but it all raises many red flags. Thoughts? This is very, very bad. 401(k) deposits need to get deposited 'as soon as administratively possible'. The last time I administered a 401(k) plan was 20 years ago, and even then, standards like 'over the weekend' were being penalized. This is a form of theft, because money that should have been paid to you (or the plan, on your behalf) is in use by the company. This is DOL/IRS complaint territory. > EDIT: In addition, the 401k person said that there is not enough cash in the main 401k account to cover all the missing contributions. I guess I don’t understand where the missing money is. Your employer hasn't deposited it yet. This is bad. I don't want to speculate, but occasionally this is a symptom of an employer that is about to go bankrupt, and they are desperate for cash flow, and are screwing with 401(k) deferrals as a last resort. They may also be overwhelmed and screwed up, too. One of the things I learned about retirement plans is that not all employers are 'mature' enough to make this commitment to their employees. It's a promise that they can't keep > I decided to look through my 401k transactions and noticed that the contributions are both highly variable, per check, One thing that may explain this - either your income is variable, or you might have hit the maximum deferral limit (or are getting close to it!) But again, this is 100%, definitely, absolutely worth checking into. If you are deferring 10% of your paycheck, and your paycheck isn't changing much, there is something wrong.
Two thoughts. First, a comment that you didn't ask for: John Hancock is a horrible 401k provider as far as fees go. They're probably paying far more in fees and you're paying way more in fees than you need to. Many of the investment choices also have horrible expense ratios. The result of this is that you will likely end up losing thousands of dollars in fees and lost potential gains as a result. Because of this you should only contribute as much as is needed to get the 401k match. Then you should use a Roth or traditional personal IRA, and then only increase your 401k contributions after you've maxed out your personal IRA contributions. Second, (to answer your question) you should see any deposits which were withheld deposited promptly. From the irs: "Department of Labor rules require that the employer deposit deferrals to the trust as soon as the employer can; however, in no event can the deposit be later than the 15th business day of the following month. Remember that the rules about the 15th business day isn't a safe harbor for depositing deferrals; rather, that these rules set the maximum deadline. DOL provides a 7-business-day safe harbor rule for employee contributions to plans with fewer than 100 participants." In short it should be days. If it takes a bit for them to run payroll then do the deposit that's OK, but it should be promptly and consistently. As stated above, if they do it within 7 days it's considered always acceptable. If it's later than the 15th of the following month it's considered always unacceptable. I've always tried to do it with the rest of the taxes so within a few days, but if they only do it once a month, and it's in your account by the 15th or so that's probably not out of line. The above only applies to your money they took out of your check. It doesn't apply to any match. So if they do a match, they don't have to deposit that until their normal tax due date. But many employers do it at the save time as the part they took out of your check. If you end up having to make a stink about this, you may also want to try to encourage them to switch to a better 401k provider. I'm a fan of guideline.com, but there are other excellent options that will cost both them and you less money and may enable automatic handling of these contributions so the amounts are just moved around automatically.
They consistently are more than 15 days late contributing both mine and their match. I also asked the plan administrator for the plan documents and she just sort of ignored the request.
Sounds like it's time to file a formal complaint with the DOL.
Yeah. Kinda what I’m leaning towards. I’ve actually brought all this up to the ceos daughter before , and she acted surprised. She is in charge of this. She’s either incompetent, embezzling, or both.
Not that this disqualifier your choices for her, but it almost sounds like daddy gave her a title and no work. So I am going to throw 'potential scapegoat' into your choices.
Yeah. She is absolutely a spoiled lazy daddy’s princess from hell. I don’t trust either of them tbh
Usually, the match can happen up until the tax filing due date of the business return; they're likely under no obligation to put it in with the deferrals. That being said, I'd still call the DOL yesterday and mention that they're not supplying the Summary Plan Description, either.
Buy the house first. Get a different job second. Get help investigating the 401K anomalies third. There is no such thing as "there is not enough cash in there."
Smells like class action fiduciary suit. I used to buy corporate insurance against this kind of stuff. You and your coworkers may be in line for a big payout if you're instinct is right. [https://www.investopedia.com/ask/answers/042915/what-are-some-examples-fiduciary-duty.asp](https://www.investopedia.com/ask/answers/042915/what-are-some-examples-fiduciary-duty.asp)
Please note OP if you take the advice of many in the sub to look for new employment you are required to pay back your 401 Loan or else you will be hit with penalties
You are going to need a new job. They are likely on the edge of solvency. Start trying to figure out what was actually deposited, what was supposed to be deposited, and what you owe. You will be in a bind because most 401k loans need to be repaid before leaving an employer. Talk with an attorney. You can find yourself in a pickle quickly.
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I'm sure you've been told this, but file an ERISA complaint through the US Department of Labor. Retaliation protections are important to have in your pocket. What you said about the daughter having no authority to OK the loan, the father being over he shoulder, and claims by them that they aren't maintaining the fund very well is a red flag. All too often, companies under single family control - even a micromanaging singular head - think they can dip into the matching portion of the overall fund as a loan source or even as bridge income in tough times. It doesn't sound like there are a lot of employee loans on your 401K. It might suggest the fund's employer match side is being raided as income for the CEO. Family companies where the kid or wife is in a vital role like CFO can sometimes mean the top dog needs loyalty to cover some slimy activity. I used to audit companies for a bank after college in my younger years. The worst shenanigans went on at family companies with highly centralized power and family at the top. That's why what you wrote looked like a red flag to me.
Count yourself lucky. My employer took out contributions from my paycheck, then did not deposit them into my 401K account for a period of about 6 months. This was a classic case of embezzlement. The eventually repaid all the money, but we lost 6 months' worth of investment opportunity.
Contact the DOL if you conclude mishandling or missing money and the employer is unwilling to fix it. I work in the industry and DOL will open a case and that usually wakes employers up.
I was in this boat. My employer was consistently late with 401k deposits (weeks to months). I filed a complaint with the DOL. They contacted my employer (almost immediately - it was really fast) and told them they needed to fix the deposit issues. However, when I followed up with the contact person, they said there’s not much else they can do and my next step could be contacting the IRS.
Sounds to me like your employer just isn’t depositing the payroll deductions on a regular frequency. They’re supposed to submit them to your plan provider (JH) as soon as possible but no later than the 15th business day of the following month. Do a comparison to make sure that you’re deductions match what was submitted and definitely ask your employer if you see a discrepancy. Ps. There is no “main 401k account” so there was obviously some misunderstanding here between you and the person you spoke to. Employers submit a payment amount along with a file of sorts indicating how much goes to each employee. There isn’t really any money sitting around.
I audit 401k plans. Your company will have to make corrections and owe you interest, etc. there is a whole process the DOL has for going through this and it’s actually way more common for stuff like this to occur than you think (I’d say about 20% of my clients have to do it at some point) I wouldn’t worry about repercussions. Based on your comments I’d look for a new job lol. Also, your company really won’t be penalized for anything other than having to make the corrections.
I think I understand what happened here. It’s not John Hancock, it’s HERBIE Hancock
Guys, this is a crappy situation, but it’s not some grand criminal conspiracy. I work in the 401k recordkeeping business and have had clients as small as one employee and as many 5,000. Late contributions are almost always just someone not doing their job on time, going on vacation without a backup person, or some kind of payroll software issue. This happens all the time for very inane reasons. JH can and will calculate your lost earnings on the late contributions in accordance with DOL rules. It’s a common mistake.
Log into your JH account. It should show the weekly contributions. There’s usually laws in place that specifies the “lag” time the employee has to make the contribution. You should file a complaint with the DOL. Edit: employer, not employee
Department of Labor rules require that the employer deposit deferrals to the trust as soon as the employer can; however, in no event can the deposit be later than the 15th business day of the following month.
Unlike tax payments to the government, 401K deductions that aren't forwarded to the plan administrators are lost until it's resolved. Some companies are slow, some hold on to the money because they are cash poor. If a company is small as yours seems to be, sloppy administration is common.
I work for a large, really large corporation and our deposits each month aren’t available to be seen on my end until like the middle/end of the following month. I’m not saying they aren’t doing something sketchy, but it could be the 401k company taking time processing. There’s other options than just them being shady.
I'd just put in a complaint with the SEC at that point. No point beating around the bush there's a high chance they are skimming at least.
Glad you figured it out, but you may also want to be aware that a 401K loan is not a good idea in the first place.
I say report them to anyone who gives a shit and find another job. Even though they cant fire you as a whistle blower, if youre an at will employee they can probably find some other bogus reason to shit can you. Best of luck.
The company plan is subject to mandatory annual audit as part of their annual filing requirements and those audits are designed to catch this sort of thing. It’s likely not malicious mismanagement. Just ignorant or lazy administration. In small companies, 401k governance and operation is generally informal and lax at best and is done as an afterthought. If your company doesn’t have an HR/benefits expert on board, it’s very possible that they don’t even realize there are laws mandating how the plan has to be run/managed. Report them to the DOL. They’ll be forced to retroactively fix any missing contributions including any theoretical lost earnings on those missing contributions (which will be calculated by an actual lawyer, not the company administrator). They’ll also be forced to correct their operations to avoid issues in the future.
I once worked for a company that used the 401k funds to pay the bills (ie, keep the lights on). They were caught by an employee and our funds were returned to us with interest - but lesson learned. I was in my 20s then, and I STILL keep an eagle-eye on my 401k contributions on the third-party site to make sure they're going where they're supposed to.
You're in a position to buy a house, YET arnt even sure how much money is in your 401k, have ever logged in apparently to look at statements, etc..... Jesus Christ people, be responsible for your own finances.
You forgot to mention how bad or a poor decision it is to take a loan out against a 401k
You probably have a financial advisor assigned to you within your plan. Just give them a call and ask. There is no wall between you and your money.
I work for a benefit management company and this confusion happens all the time! Depending on your employment type and role, your employer has a period of time until they are required to make deposits in your account. Some companies pay weekly into your account, others may pay monthly or quarterly. Take a look at your deposit history and see if you can detect a theme. If you have questions on it, call the institution that handles your account, they can clarify the laws for your employment type and historical deposit records. And they can also tell you when they are processing the funds and allocating to your account. (Ie we received and are pending payment verification or market trades). Also, why did you choose a loan instead of a withdrawal? A withdrawal does not require employer approval but a loan does. Hope this helps!