failure to remit SIMPLE IRA deferrals

[Guest mjn]

An employee made elective deferrals into a SIMPLE IRA plan during the year. She received a statement from the financial institution and noticed that no deposits were being made. The employer was unresponsive. Finally after several months of putting her off, the employer issued a check to her refunding her elective deferrals. She has since terminated employment.

Can she report this situation, and to whom - the IRS? The DOL?

She has check stubs showing the deduction for the SIMPLE IRA contribution, but has not yet received her W-2 for 2004.

Thanks!

[SoCalActuary]

The employee should try to report this to the IRS as potential tax fraud. The employee should have had not only her deposits made timely, but also her matching contribution from the employer.

The DOL might also be interested.

In addition, she should consider having a lawyer write to the employer demanding performance against her salary deferral agreement.

[Lori Friedman]

Isn't it amazing how many employers believe that elective differals and payroll tax withholdings can be used as a business's very own piggy bank?

[Guest mjn]

Thanks for the advice, SoCalActuary!

According to the employee, her employer has been slow to deposit her deferrals as far back as 2001, but they were always EVENTUALLY deposited - until this past year. 2004 was the first year they decided to refund the deferrals to her (not at her request).