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Maureen Lilly

Default payment by employer.

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Last year of March I believe,  I took a loan out from my 401k and set it up as a payroll deduction to pay off the loan. A couple months before the end of last year, I received a letter from my 401k c okk money stating that there was a default with one of my loan. So the firs thing I did is call my payroll department and asked them what happen. The lady o spoke to said that it wasn't their fault and that it was the 401k company. So I called  them again and they said that they even send an email to my employer to fox the problem but they never did. Considering that I'm a single mom with 5 kids, I could afford to pay off the amount of $1268 estimating amount of the default payment. So for the next following year, which  is this year, I received a 1099 for the whole entire loan that they reported to the IRS. I already filed my taxes before I even received it coz I didnt get it until last week. So now I have to worry about having penalties and late fees from them. But this wast the issue,  my issue was whe I got my tax from last year 2 weeks ago, I called the 401k company to see if I pay off one of the loans I  have if I can reloan again. I spoke to at least 4 different representatives and I've asked them all the same questions if me having a default will affect me getting another loan. And they all said no. That it shouldn't matter coz my company allows us to get 2 loans out. The reason why I need this loan is to use for my daughter's medical condition. My daughter have crohn's disease that needs an expensive Infusion every month. I havent reach my deductible so I know I have to pay out of pocket. But because my tax wasnt enough,  I called my 401k and asked them about this information. With the information they told me, I went ahead and paid off the smallest loan I have with my income tax so I can reloan for a higher amount. The representative that helped me with my payment told me to wait 7 calendar days and for me to call back on the 8th day so I can process a new loan. With all this issue going on, i spoke to my benefits manager a week ago  to help me out with the setting the payment and to make sure that the payroll department isnt screwing me up again. They called me back on the day before I was gonna call to get another loan and  she said because of the default that the 401k cant give me another loan. I was like,  that's not what they told me. Now shes saying that because of the default with one of the loans,    I cant even reinstate my account. I asked what if they take out the default amount from the new loan I'm getting g to get me caught up, would that work. She said no!!! I m sorry to say this a d use this language but they both F...ed twice! Now.my daughter is about to have her infusion by the end of this month and I dont even have the money to pay for it. Is there a way around this to protect me? I also spoke to the manager of the 401k company and they apologize to whats going on and that she'll file like a case to let me get another loan since I didn't put the stop on the loan but my employer did. So I called today a d the lady I spoke to said they cnt do anything about it. It all depends with my employer. I've been with this com pl any for 19 years and never once encountered anything  like this! Please  tell me if theres a way around all this and how I can reinstate my 401k to get a new loan. I also wanna see if theres a way my employer can fix the report to the IRS that its their mistake not mine. 

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You need a local person you can work with to pursue this issue.  You are not going to get what you need from this board.  You don't necessarily need an attorney, but that might be one route.  What you  need is a competent plan administration firm who, for a fee no doubt, would guide you through this by reviewing your actual plan documents to figure out what you are entitled to and then communicating with whoever is the right party to implement the desired process as permitted by the plan.

Good luck.

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You have to get your benefits/payroll people to try a little - or a lot - harder to get the default fixed.  It is not acceptable for them to say the 401k company screwed up and then not make them fix it.  It is possible that your payroll department screwed this up.  None of this is easy and I'm sure you have other things you need to do but you need to look at your 401k statements, compare them carefully to your paystubs, and figure out if your loan payments were improperly treated as 401(k) contributions, or...what.  It is possible that your payroll department wasn't remitting them properly, or wasn't remitting them at all.  If you can't figure out your statements, park yourself in someone's office and make an absolute pain in the a$$ of yourself until it is fixed.  

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11 minutes ago, Bird said:

You have to get your benefits/payroll people to try a little - or a lot - harder to get the default fixed.  It is not acceptable for them to say the 401k company screwed up and then not make them fix it.  It is possible that your payroll department screwed this up.  None of this is easy and I'm sure you have other things you need to do but you need to look at your 401k statements, compare them carefully to your paystubs, and figure out if your loan payments were improperly treated as 401(k) contributions, or...what.  It is possible that your payroll department wasn't remitting them properly, or wasn't remitting them at all.  If you can't figure out your statements, park yourself in someone's office and make an absolute pain in the a$$ of yourself until it is fixed.  

While all that is true, you are best advised to find someone who can walk you through this.  I am NOT volunteering, but we occasionally get called into situations (usually by lawyers or accountants) like this to help the participant and then WE do all the hard work to figure out what went wrong and get it fixed if that is the right call.  FWIW.

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About looking at the check stubs after I received the letter of default, I did found their mistake. But I wanna know is that the 401k girl is practically telling me is that my 401k is is the stage of it being frozen where I cant get any money from it. Which I dont get coz I wanna fix the default but they're saying even if I come up with the money to pay the default amount, it's still not gonna reinstate. So how is that gonna help me? It's like,  someone else screw up and I get punished for it!!!! I don't think its right!!!  I got F...ed twice by this people! Wrong information and for my employer stopping the payment without me telling them to!!! I paying for someone else's mistake!!!! I've been with this company for 19yrs and never once encounter anything like this!!! So please help me in what to do. Thank you! At Larry  Starr do u know anyone that could help?

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2 hours ago, Maureen Lilly said:

About looking at the check stubs after I received the letter of default, I did found their mistake. But I wanna know is that the 401k girl is practically telling me is that my 401k is is the stage of it being frozen where I cant get any money from it. Which I dont get coz I wanna fix the default but they're saying even if I come up with the money to pay the default amount, it's still not gonna reinstate. So how is that gonna help me? It's like,  someone else screw up and I get punished for it!!!! I don't think its right!!!  I got F...ed twice by this people! Wrong information and for my employer stopping the payment without me telling them to!!! I paying for someone else's mistake!!!! I've been with this company for 19yrs and never once encounter anything like this!!! So please help me in what to do. Thank you! At Larry  Starr do u know anyone that could help?

Where do you live?  And recognize, you will be hiring someone to help you and there is a cost for that.

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5 minutes ago, Maureen Lilly said:

I live in Las Vegas Nevada. How much will this cost me?

You can try these folks; I can vouch for them: https://pinnacle-plan.com/third-party-administrator-las-vegas/

What it will cost you is dependent on a bunch of things, but it certainly won't be "cheap".  Hourly rates could easily be many hundreds of dollars.  Good luck.

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6 minutes ago, Maureen Lilly said:

Ate they lawyers?

Maureen: I gave you a link. Please check it out.  

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18 hours ago, Maureen Lilly said:

About looking at the check stubs after I received the letter of default, I did found their mistake. But I wanna know is that the 401k girl is practically telling me is that my 401k is is the stage of it being frozen where I cant get any money from it. Which I dont get coz I wanna fix the default but they're saying even if I come up with the money to pay the default amount, it's still not gonna reinstate. So how is that gonna help me? It's like,  someone else screw up and I get punished for it!!!! I don't think its right!!!  I got F...ed twice by this people! Wrong information and for my employer stopping the payment without me telling them to!!! I paying for someone else's mistake!!!! I've been with this company for 19yrs and never once encounter anything like this!!! So please help me in what to do. Thank you! At Larry  Starr do u know anyone that could help?

So was the main problem that they stopped withholding on your loan?  That points the finger back at your employer, not the 401k people, although the 401k people did give you bad advice (that you could get a new loan).  Ultimately, you have to get your employer to step up and fix it, and it won't be easy (maybe to get them to admit, and definitely to fix it).  They might say "well you should pay attention to your paystubs."  I'm not sure if there is a legal counterargument to that.  I'm concerned that if you pay someone it won't necessarily get this fixed, so be sure to explain things thoroughly and get an estimate before you open your wallet.  (As I see it) the only way anything positive happens is to get your employer to admit their mistake and work with the 401k people to correct it.  I repeat, it won't be easy.

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Is there anybody that I can get like a free consultation first? Or this is the people you're recommending? I need my employer to allow.me to get another loan for medical purposes. It's my money and the fact that they made a mistake not me, why am I getting punished for it!!! I dont understand this big company!! They take advantage of people like me. I think I'm gonna ask my employer for a copy of the policy for our 401k  coz I think there's gotta be a way around this. Like if its default,  then allowing me to pay the default amount or the missed payment and reset my account, simple as that! I'm willing to pay  the default amount off. 

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5 minutes ago, Maureen Lilly said:

Is there anybody that I can get like a free consultation first? 

Your "free consultation" is the comments above.  Go back and re-read the comments from Bird.  Your employer/HR/payroll has no business blaming someone else.

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Hi! Does your plan allow you to take a hardship withdrawal? Hardships can help with medical bills and you can submit the bill for your dependent for proof of hardship. That may be one option.

At the end of the day, if your employer failed to set up your loan in the payroll, they are liable for correcting it. You could tell your employer you intend to call the Dept of Labor and let them know that the employer, as ERISA administrator, failed to monitor the plan to determine if the loan was being repaid, and therefore breached its fiduciary duty. They may change their tune then. 

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4 minutes ago, RPAS said:

Hi! Does your plan allow you to take a hardship withdrawal? Hardships can help with medical bills and you can submit the bill for your dependent for proof of hardship. That may be one option.

At the end of the day, if your employer failed to set up your loan in the payroll, they are liable for correcting it. You could tell your employer you intend to call the Dept of Labor and let them know that the employer, as ERISA administrator, failed to monitor the plan to determine if the loan was being repaid, and therefore breached its fiduciary duty. They may change their tune then. 

You could actually call the Department of Labor or file a complaint if you think that your employer is failing to comply with its obligations:  https://www.askebsa.dol.gov/WebIntake/?_ga=2.89553106.899451424.1584131768-1326969282.1564074320

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Ok thank you. The sad part to is that they've already reported to the IRS about the loan being defaulted even though it isnt my fault. The lady manager who's in charge of our benefits is simpl5blaming me also for not checking my check stub. But what I don't understand is that I have two loan out and the other loan is being paid as scheduled,  that's why I dont know how they can screw it up. That same lady also said they sent me letters that it was defaulted which I never did and doesnt make any sense. I have no control of my check until I get it so they're the ones that send out whatever is needed to be sent out before I get my check. Including the tax, payment for insurance etc. I was like if I received a letter,  I would have fix it right away. I didnt receive any letter from them  but i did received 2 from prudentiial and they even said that they emailed my employer to FOX the problem. But that not until it's almost the end of 2019. So it didn't get paid for.like almost 6 months and she's saying  it's my fault. With someone's mistake,  I can't get another loan out even though I sent my only money to pay off one so I can reloan,  became of the default, was given wrong informations by not 1 but more by  Prudential employees and now I'll be facing penalties and late fees from IRS. I'm so screwed so much!!! But they dont seem to care. 

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