lost employer matching contributions

[Guest baxterdale]

Please advise.

My problem is very basic. For the calendar year 2000, my 401k contribuitons were $10,500 and I never received the employer matching contributions that were part of the plan.

I am fairly sure it was a clerical error, but have no idea about how to get this resolved.

Details. I had made a maximum contribution to my 401k by about July of 2000. The record keeper for my plan up till this point was Pan American. The company I was working for had purchased my prior company and was in the process of closing out the Pan American accounts over to Fidelity. This (I think mandated) consolidation occurred in November of 2000.

In the prior couple of years I would always see the employer matching contributions show up about the end of February of the next calendar year...so my expectation was that Fidelity would show the contribution around March of 2001...and of course I waited till then and no money :mad:

Around April of 2001 I started getting anxious. I have spoken with Fidelity and they say they know nothing about it; infact this plan as it is set up matches every contribution (much better); I have spoken with my (now former) company and they all but told me they have made a mistake...but said Fidelity refused to take the money.

So now they have referred it to ERISA? What they are suppose to do or not do I have no idea.

The crux of the problem is when closing out the original plan a mistake was made by not calculating employer matching contributions.

Do I have any recourse. Should I be seeking legal advice; especially since it is now July and I no longer work for that company. They (former company) are very slow to respond to my inquiries let alone answer the phone.

Is this a typical problem? I would think mergers occur often and this problem should certainly be foreseen?

Should I be seeking legal counsel?

Any advice is appreciated.

Thanks

[rcline46]

Send registered letter stating that if match is not in by xx days after receipt of letter you will contact the DoL / PWBA.

[Guest boberlander]

Did anyone at your former employer receive a matching contribution?

Although you were told it was a mistake, do you believe this? Could the company have decided not to make a contribution?

If other employees received a match, did anyone else miss out on it?

Just interested. The registered letter should get their attention, but it's good to understand the whole situation.

[Guest baxterdale]

I have spoken with two other employees that also did not receive employer matching contributions.

Was it a mistake or on-purpose? First of all, I must set aside my personal feelings, since I was laid off from this company in second quarter of 2001. I have spoken with an individual who has told me that it was a mistake, and that they are aware of "all" of the folks who are affected by it. Therefore, I want to believe it to be a mistake; amazingly I am the only employee who noticed that money was missing; (this is money isn't)

As far as I know no employees part of the plan being merged received any employer matching money for calendar year 2000.

Ironically, I just spoke with the individual at the company today. She remarked again that they want to make the matching contributions but are concerned with the proper method of doing it. This individual also told me that an ERISA attorney is working on it. Previously, I was under the impression this was some form of government agency dedicated to enforcing 401k law...but then today I simply asked her who is paying for this attorney's service; and of course it is my former company.

My impression is that they don't know how to do the right thing and are fearful of getting caught doing the wrong thing. Any ideas on how I should tell fix there error are appreciated. Meanwhile my patience factor is drying up.

Thanks

ps what does the acronym PWBA represent?

[pmacduff]

Pension & Welfare Benefits Administration

[RCK]

It seems to me that you need an advocate to help you push the process along. My experience as a plan sponsor is that the regional PWBA offices can be very helpful. But you might need to get another affected person to call too--I think that they are more interested if there are several complaints.

I'm not sure how to insert a link to the appropriate section of the DOL website, but here it is: http://www.dol.gov/dol/pwba/public/contacts/folist.htm

Find the regional office that includes your state, and give them a call.

RCK

[Disco Stu]

Just a couple of additional pieces of information for consideration...

If no one in the plan received a matching contribution, it could be that the plan's matching contribution is discretionary. It is very common, even in situations where a company plans to always match at a certain level, that the amount of the match or the fact that there is a match at all, is discretionary from year to year.

The other point to consider is that the company really has until they file their corporate tax return to deposit any employer contributions for 2000. With an extension, this date could be as late as 9/15/01 (assuming 12/31/00 corporate tax year end).

While I would agree that you should continue to push for answers, it might very well be the case that the employer has not done anything wrong and is still trying to make a decision on what if anything will be done for the 2000 year.

[Richard Anderson]

From baxterdale's second post:

"Ironically, I just spoke with the individual at the company today. She remarked again that they want to make the matching contributions but are concerned with the proper method of doing it. This individual also told me that an ERISA attorney is working on it."

It seems to me from the above that the company knows that it has made mistakes and is seeking advise on the proper way to correct. It may be taking longer than it should or longer than baxterdale thinks it should, but the company seems to be proceeding properly.

Also, if the match is discretionary, the plan document probably states that the matching contribution will be made by the due date of the employer's tax return, which could be as late as 9/15/2001 for a corporation's calendar year 2000 plan.

baxterdale,

PWBA = Pension and Welfare Benefits Administration, part of the Department of Labor.

[Guest Ella]

The provisions of 401(k) plans are spelled out in a plan legal document. You have a legal right (under ERISA) to a copy of your plan document. You may have to pay for copying costs but that is all. Ask in writing now for a copy of the complete plan document - not a Summary Plan Description (employee booklet. There are penalties for the company if they do not send you the document.

The plan document will spell out whether that match is discretionary or not. You will need the document also if you should choose to ask an attorney for help. However, DOL (PWBA) assistance is free and ususally effective.

The fact that you are asking for the plan document may trigger some higher level management attention to the question.

Ultimately, if it is a discretionary match, the company may choose not to make the match for that time period. They also may make the match later - just as long as it is before the corporate tax return is filed.

I am a plan sponsor who happens to use Fidelity now. Fidlity and all the established recordkeepers will accept a match contribution when advised to do so and if given a list of employees to receive the contributions. This is not a recordkeeping vendor issue at all.

[Guest baxterdale]

As usual a great deal of time has passed before anything significant on this matter occurred.

Yesterday I received a payroll check from my former employer and a memo.

The check was for a gross amount that was of course subject to all appropriated taxes. The gross amount was calculated to be what my year 2000 employer match to my 401k plan was.

The memo documented that the check was to compensate me for the companies oversight in not paying the employer match. This occurred when they were consolidating 401k plans.

My questions.

Should I be happy and cash the check?

(taxes eat up about %40 of the gross - not to mention this solution kinda defeats the point of "saving for retirement" using a tax deferred strategy)

Should I contact the Department of Labor?

I think this situation affected about a dozen folks, I wonder if they reconciled with them or if only the squeaky wheel (me) got a little grease.

Has anyone ever heard of a company fixing a mistake like this?

Thanks for any opinions or information in advance.

This site is full of great information and has been very helpful in getting even the partial solution I currently have.

Thanks

[Guest Ella]

How do you feel about this? Do you want to just cash the check?

If not, then ask for your contribution to be made to the plan. The employer doesn't have a right to make a contribution other than to the trust fund for the Plan. That check may say that it is for match, but if it has never been in the plan, it is not a 401(k0 match contribution. It is just severence pay from the employer. They also have no right to distribute 401(k) contributions of any sort. The distributable events are spelled out in the document and in IRS regs. So if you want a contribution to your plan, tell them to make the contribution to the trust.

If you have any trouble, go to PWBA (DOL). DOL wants paln contributions to be made in accordance with regulations and the employer has a responsibility to do so.

Those folks don't seem to have gotten any legal advice. What they are doing is rather basic and their solution is not really an option for them.