Refunded Contributions

[Andre3000]

We're terminating our plan due to M&A. We stopped taking money 2 days before the last payroll, so contributions were withheld from paychecks and will need to be refunded during the next payroll runs. I'm not concerned about the weekly people, but for our semi-monthly and monthly payroll people, is there anything I should be concerned about as far as holding on to the contributions and accruing interest for half a month or a month? EE's will squawk, but I just want to confirm.

[QDROphile]

Many states have payroll laws that forbid withholding without employee consent. There are law firms that specialize in bringing class action suits for the statutory penalties involved. If I were of such a mind, I might assert that failure to deliver to the retirement plan as directed means that delay in refunding the money that could not be used in accordance with the consent is a violation of the statute. Withholding money and then not paying it until it happens to be convenient for the payroll system does not present a nice picture.

[david rigby]

We stopped taking money 2 days before the last payroll,...

This might be shorthand for something.

Does it refer to an effective date in a plan amendment? or perhaps some administrative date?

[Andre3000]

An addendum...

the plan terminated on wednesday. payroll paid on friday and was processed on tuesday prior. we didn't know when the deal was going to close, so we had to keep everything in the system.