California Final Wages

[longjongbongkingkong]

So i have a big question regarding final pay, and if my 401k should be included as final wages. I worked for home depot for 9.5 yrs, i am 100% vested in my account, valued at about 36k$. Home depot has been dragging their feet. I left home depot to go work for the state of california. I have called home depots benefits center multiple times and they will not cash out my 401k until after 30 days past my termination date. California law requires payment of "wages" on your final day if you gave enough notice, which i have. 

 

 

I emailed hd notice on 8/1/23

My final day was 8/11/23

 

I was talking to the HR Rep on 8/22 by email and she gave me the option for a check or to come into the store to get a payroll card for my sick and vacation time. i told her ill take a check. Home Depot decided to give me 32 hours of wait pay, which i am sure they calculated incorrectly.

https://www.dir.ca.gov/dlse/faq_waitingtimepenalty.htm

 

so at minimum, im owed 11 days pay, or 88 hours. But IF 401k  counts as wages, then im owed the maximum pay out, 30 days or 240 hours of pay. Here is my check for the wait time. they probably just put a number in there. The state website says you calculate it on calendar days. 

 

 

 

 

https://www.dir.ca.gov/dlse/faq_waitingtimepenalty.htm

https://ferrarovega.com/resources/what-are-waiting-time-penalties-in-california/

 

 

This is from their stupid guidance: It's probably violating california law:

 

 

 

Does anyone have any information regarding 401k needing to be paid out on your last day of work of if its considered "Wages"??

 

 

 

Thank you!!

 

[C. B. Zeller]

Hi longjongbongkingkong, welcome to the forums!

401(k) plans are governed by ERISA, which preempts state law.

ERISA sec. 206(a) allows a plan to delay a distribution to as late as 60 days after your normal retirement age under the plan, or even later in some cases. So them allowing you to take a distribution 30 days after termination of employment is sooner than the legal minimum standard.

[ratherbereading]

It's not "stupid guidance", it's their plan document.  You should have been received SPDs (Summary Plan Descriptions) during your employment and this would have been noted in there. Even though it's crazy California, in this instance, they are correct in delaying your distribution.  

[CuseFan]

And these are not wages, they are retirement benefit accounts, subject to ERISA and IRS rules (law) and must follow the formal plan document provisions (legal obligation) as noted above.

FYI, I suspect that delay in paying out 401(k) accounts is to avoid someone quitting Monday, getting their 401(k) by Friday and wanting their job back Monday.

Finally, if you're not planning to roll over your 401(k), 20% will be withheld for Federal tax liability, and your ultimate taxes will include Federal, CA state and if you are not age 55 there is an additional 10% Federal tax. 

[longjongbongkingkong]

Thank you all for the replies. 

I have a lot to read and consider. But you have a couple lawyers posting on the web that 401k should be in final wages, just like the vega website i included in the original post. Im trying to determine where these lawyers are getting that information

[ratherbereading]

10 hours ago, longjongbongkingkong said:

Thank you all for the replies. 

I have a lot to read and consider. But you have a couple lawyers posting on the web that 401k should be in final wages, just like the vega website i included in the original post. Im trying to determine where these lawyers are getting that information

You're talking about 2 different things, I believe.  Yes, your 401k deduction, etc. will be withheld from your final paycheck, but the Plan's legal document dictates when you can actually take a distribution.  In other words, if you want to take a distribution of your 401k account, it's not going to be processed on your last day of employement. As you show in your plan's legal document, your distribution cannot be processed prior to 30 days after your date of termination.