missed deferrals, or opportunistic employee

[K2retire]

A 401(k) plan client without automatic enrollment has an employee who recently asked why the deferrals that he requested in 2014 were never implemented. Neither the employer nor the employee has a copy of an election form. Absent any evidence of an election being submitted, how would you handle a possible correction? The employer wants to do what's right, but doesn't wish to be taken advantage of!

[My 2 cents]

I don't work on 401(k) plans, but if the employee was eligible to start deferrals in 2014, shouldn't the employer have insisted on either a written election to defer or a written election to not defer? Or at least have something in writing to show that the opportunity was presented to the employee on a timely basis to commence deferrals (presumably containing a statement that no deferrals will take place until the election has been made). If you can show that the employee was given the opportunity to defer, then the burden should fall on the employee to show that he or she had taken the steps necessary to start deferrals. Doesn't sound as though the tightest administrative procedures are being followed here.

[rcline46]

Two years?!?!?! B.S. Get a signed form and start now. If individual direction, quarterly statements are required, if not then annual.statements. Complaint for 2014 or 2015 is too late.

[Peter Gulia]

Some employer/administrators treat an employee's acceptance of a Form W-2 without objection as the employee's approval that she was paid what she was entitled to (and also did not get more income than she expected).

[401king]

Some employer/administrators treat an employee's acceptance of a Form W-2 without objection as the employee's approval that she was paid what she was entitled to (and also did not get more income than she expected).

I wish we could shorten that timeframe to a number of days after reviewing a pay stub.

[GMK]

Some employer/administrators treat an employee's acceptance of a Form W-2 without objection as the employee's approval that she was paid what she was entitled to (and also did not get more income than she expected).

I wish we could shorten that timeframe to a number of days after reviewing a pay stub.

​Is there a reason employers/administrators cannot do either of these? (asking because I don't know.)

In either case, the employer might avoid creating disgruntledness and possibly legal issues if the employer informs employees in advance of how the employer is treating employee acceptance of W-2's and if the employer informs employees of the deadline for employees to file a request for a correction. Kinda like deadlines needing to be listed in claim denial letters, maybe.

[Peter Gulia]

A person that acts as a plan's sponsor, a plan's administrator, or (often) both might consider a time limit is reasonable under ERISA sections 413 and 503.

[GMK]

I'm just being a worry-wart if a case went to trial.

I don't know of many employees who think they have an obligation to review their W-2's and pay stubs (although some review them). And I doubt if any think there's a deadline to file a request for a correction. I agree with rcline46 (post #3), but I have no idea what basis a judge might use to decide about the timing in the OP.

For example, wrap documents for welfare plans and ERISA Rights summaries in handbooks and SPD's clearly notify participants of the deadlines for appealing a denied claim, but circuit courts have ruled that certain deadlines have to be specified in the individual denial letters as well or they don't apply.

[K2retire]

The plan is bundled with a large payroll provider. We're checking with them to see if they have any evidence of an attempt to make an election online.

I'm inclined to agree with post # 3 also, but wanted to see what others thought, particularly since I also agree with post # 8.

[masteff]

When I was in corporate employee benefits, our SPD clearly stated that deferral elections were not valid until submitted and accepted on the proper form (in our case, that form was online via our trustee/recordkeeper's website). So I might suggest seeing what your plan documents say. Then the appropriate action, which you appear to have started, is to review your and your provider's records to find any trace of such an election but if neither you nor the payroll provider find such, then the burden is on the employee to prove they properly submitted it. Improperly submitted elections are invalid.

[Peter Gulia]

I missed a word in post 7; it should refer to considering whether a time limit is reasonable under ERISA sections 413 and 503. The evaluation also should consider whether the communication and the procedures are reasonable.

Nowadays, a paystub often takes the form of an automated e-mail. Perhaps a notice of the kind GMK alludes to (which a panel of First Circuit judges considered necessary in particular circumstances) could be included in payroll's e-mail.

[BG5150]

We don't even get pay stubs any more. They are available at anytime online, though.

[jpod]

If there is evidence - and that can include credible testimony from witnesses in a position to know - that there is was an established protocol in place for informing new employees or employees in general about how to make elections and change elections and there is no evidence of the employee attempting to make an election, then it's the employee's unsubstantiated claim vs. that evidence. I would see no material risk of disqualification in that scenario, and an equally low risk that the employee would prevail in court on some type of damages claim.