unrequested plan change

[Guest cshindc]

I have a question regarding changes in my contribution level that I never requested. I just discovered that my employer, inadvertently it seems, significantly reduced my 401(k) contribution level for the last four months of 2005. I know that I should have noticed this earlier myself, but regardless, do I have any recourse?

My employer has indicated that since we end on a calendar year, there is really nothing that can be done as they are prevented from "correcting" their error. I have reinstated my correct contribution level for 2006 but am trying to find out if anything can be done about 2005.

Any help would be appreciated.

[QDROphile]

Plans must be operated in accordance with their terms. The plan has failed if it did not properly follow deferral instructions. The failure disqualifies the plan. The plan can be corrected to remedy the failure. The remedy depends on the circumstances, but generaly involves putting the plan into the position it would have been in if the mistake had not occurred. The personal tax consequences may not be the same under the correction. Your employer is ignorant, unimaginative, and insensitive to compliance. Pointing out a qualification issue may get attention. The mistake should be fixed, whether or not you want to have it fixed.

[Guest mjb]

Before going off the deep end of disqualification (which is not invoked for an inadvertent failure to withhold salary reduction) how about giving the facts of the issue including the amount that you feel was not deferred. Confronting the plan admin with a disqualfication threat is not going to win you friends at your employer. You need to be careful about the responses you receive on this board because some posters do not understand the employee relations dynamic involved in bringing errors in plan administraton to the attention of the HR/plan administrator. There is no error under the plan if the mistake was made by the employer in failing to withhold the proper amount to be deducted from your pay. You should also review your salary reduction agreeement, SPD and investment statements that you receive from the plan for disclaimers that require the participant to promptly notify the Plan admin in the event of errors or mistakes.