Penalty for nonpayment into 403b fund

[Guest cadmaslib]

I'm new to this message board, so please bear with me. My concern (question) is - what penalty may an employer face if he does not deliver his employees' contributions to the pension fund administrator within a timely manner? I started working at a nearby university close to three months ago. Since my first pay check the proper amount for my pension contribution has been deducted. Now, I have been notified that none of these contributions have been forwarded to the pension fund. In fact, for the last quarter, none of my fellow employees contributions have been forwarded. We have been told that the employer has 15 days to forward your contribution - Is this true? If so, what penalties may he now face. Any help will be appreciated.

[BeckyMiller]

First Welcome!!!

Second, as a participant in a 403(B) plan of a government unit the rules are a little foggier than for folks in a 401(k) plan. Your plan is not subject to ERISA - the Employee Retirement Income Security Act of 1974. That act includes specific rules and enforcement actions regarding employers who fail to deposit employee retirement contributions within a reasonable time frame.

A 403(B) plan of a governmental unit is not subject to that law. Now, you didn't say that this was a public university, but.... that may not help. Even if it is a private university, ERISA Regulation 2510.3-2(f) says that 403(B) plans are not subject to the act if the sole involvement of the employer is to facilitate the employee's savings through payroll withholding. So..even if you are with a private university, you may not be covered by ERISA. However, if it is a private university and the employer makes contributions to this program, it is subject to ERISA. In that case the rule is that it has to be deposited not later than the 15th business day of the month following withholding. ERISA Regulation 2510.3-102(B). This is a critical issue for the DOL and they are actively enforcing this matter. You can contact an enforcement officer at your regional office. See http://www.dol.gov/pwba/AboutPWBA/org_char....html#section13

However, before contacting the DOL, I would ask your personnel office what was going on. It may be that they are in the midst of changing service providers and the funds have been deposited for your benefit, but not yet transferred to the investment house...

If you are not an ERISA plan, you have to work with the IRS. That is a more cumbersome process. If this is a serious problem, that is, when you ask, you get no good answers, you might try contacting one of the pension advocacy groups. They can give you better insight than I. For example, try the Pension Rights Center.