Employer Not Submitting Payments Withheld on My Check

[Guest curtis1007]

I have had a 401k loan for 18 mos. My employer is currently having some financial problems. Myself and 3 other employees just noticed that our loan payments have not been submitted to our 401k provider for 3 months now. They ARE deducted from each of our paychecks and have been every payroll period. I contacted our Plan Administrator and was told they were working on it. How long does an employer have to put our money into the loan repayment account once deducted from our paychecks? Any info would be very appreciated.

[QDROphile]

Loan payments would probably be held to the same standard as elective deferrals -- a few days from pay day at most under usual circumstances. Correction of late payments usually involves the employer putting some more funds to account for time value of the money -- different terms of art and measures may be applied depending on how one looks at the delay.

[Belgarath]

Generally only a few days, as QDROphile mentions. Under no circumstances would it be beyond the 15th business day of the month following the month withheld from your paycheck. There are certain voluntary correction programs/procedures that the employer can use in some circumstances to mitigate their penalties, and to make you participants "whole."

The Department of Labor takes this very seriously, and generally comes down hard on violators if they are reported. However, I'm sure you know that employers have great power to retaliate against employees, so I urge you to be careful when considering what action is appropriate.

[RCK]

What about contributions? Are those being made in a timely manner?

If contributions are going in, but loan payments are not, I would be sympathetic to it being just a systems glitch. But the other responders' comments are right on--15th of the month following the month of withholding at the absolute latest.

[J. Bringhurst]

The DOL has issued an advisory opinion [DOL Advisory Opinion 2002-02A (May 17, 2002)] on the late remittance of loan repayments. They are considered to be the same as the late remittance of deferrals. Although the DOL regulations include the 15th day rule, this is by no means a safe harbor. The "as of the earliest date on which such contributions can reasonably be segregated from the employer’s general assets" rule actually governs here. [29 C.F.R. § 2510.3-102(a)] If the employer typically remits in 2 or 3 days, then that is the standard anything too much beyong that point may be considered untimely. The employer can correct under the Voluntary Fiduciary Correction Program or submit Form 5330 with the applicable excise tax. In either case, the late repayments PLUS missed earnings must be credited to the Plan/participant account.

[Kevin C]

The DOL regulations were changed on 1/14/2010 to include a safe harbor time period for deposits of amounts withheld from paychecks into plans with fewer than 100 participants. The safe harbor treats the deposit as timely if it is deposited within 7 business days.

http://www.dol.gov/federalregister/HtmlDis...;DocumentType=2

That doesn't automatically mean a deposit later than 7 business days is late. The regular timing rules would apply. But, based on our experience with DOL audits over the last few years, I wouldn't count on being able to convince them that anything over 7 business days is really timely.

[Guest MaxiH]

The Department of Labor takes this very seriously, and generally comes down hard on violators if they are reported. However, I'm sure you know that employers have great power to retaliate against employees, so I urge you to be careful when considering what action is appropriate.

My employer puts my contributions in my (403b) plan when they feel like it-- For example last year, monthly payroll deduction was first deposited in June then a little bit in August and then about 40% of previos yearly total deposited first part of Jan. As of March 11 still waiting on 33% from previous year which still hasn't shownup. I have complained before and received the customary "working on it" but they get back in their ways in a short period of time. I'm just a blue-collar worker and I need my job but this is BS. Any legal retaliation for Retaliation for a longtime employee?

[J. Bringhurst]

The Department of Labor takes this very seriously, and generally comes down hard on violators if they are reported. However, I'm sure you know that employers have great power to retaliate against employees, so I urge you to be careful when considering what action is appropriate.

My employer puts my contributions in my (403b) plan when they feel like it-- For example last year, monthly payroll deduction was first deposited in June then a little bit in August and then about 40% of previos yearly total deposited first part of Jan. As of March 11 still waiting on 33% from previous year which still hasn't shownup. I have complained before and received the customary "working on it" but they get back in their ways in a short period of time. I'm just a blue-collar worker and I need my job but this is BS. Any legal retaliation for Retaliation for a longtime employee?

You can certainly make an anonymous call the Department of Labor. You should obtain the Plan information from your summary plan description so that you can let them know what plan to investigate....Plan Sponsor, Plan Sponsor EIN (employer identification number) and Plan Number. I'm assuming that this is an "ERISA" 403(b) plan.