Never Offered to Participate in Safe Harbor 401K Plan by Employer

My employer had a 401k plan set up in his office and he is small business owner.  He never offered the plan to anyone and actually lied and said at times he didn't have one.  He did in fact have one and he is the only one who participated in the plan. He is incorporated so he as an employee was the only was that invested in the plan.  I've told him I know and tried to let him make it right and he fails to admit he has it and said it was not set up properly so its not a valid complaint.  Its a lie I talked to the person who was his contact with the 401k plan and she explained to me what a safe harbor plan is. What do I do ?  How can i report him and make him pay me?

You should contact the Department of Labor. If you complete the online form:

https://www.askebsa.dol.gov/WebIntake/Home.aspx

Someone will usually call you within a business day to try to help you.

Additionally, you can try to find the Form 5500 (annual reporting form) for the plan by doing a search on https://www.efast.dol.gov/welcome.html

I find searching by EIN to be the most effective. You may be able to find your employer's EIN on your W-2 or paystub. If you do find one listed, I would save the most recent one and have the information handy or send it to the DOL with your request as it will have good information that they can start with, such as the legal name of the plan. 

If you cannot find it, that doesn't mean there is no plan.  He may be lying and saying he has no other employee, and filed an abbreviated form that is not available to the public.

Are you a W2-paid employee?  Do/did you work full time?  

Just a warning about timing: the Form 5500 filing mentioned above will have a "delay".  Example (assuming the plan year is calendar year): the filing for the 2018 plan year will be due no later than 10/15/2019.  If the plan was created in 2019, the first filing is not yet due. 

If you are correct that the employer is lying about it, he may also be looking for ways to subvert the filing process (in which case, the above efast website might not be useful to you.)

It may be that the employer classified you and others as independent contractors. Were you issued W-2s or 1099-MISCs? If you were in fact an employee, there are all kinds of tax reporting and withholding rquirements which were violated and are subject to substantial tax penalties. You should also notify the IRS.

Lenny, hold on a second.  Nobody likes to be taken advantage of, but I will throw this out for you.  First, you better be 100% sure that the facts you think you have are accurate, otherwise you will probably be fired (I know I would fire you).  Second, assuming you have all the facts correct, your employer may fire you anyway.  Yes, that would be illegal under Section 510 of ERISA, but is this aggravation worth it for a 3% of pay contribution?  Third, even if your employer agrees to fix the problem and doesn't fire you, what would your work days be like going forward after you have dropped a dime on your employer?  Unless you are prepared to have a miserable existence at work or quit your job, i would think carefully about contacting the DOL (because of a very modest 3% of pay).  

Also, I have to say that two things here don't make a lot of sense to me:  (1) that someone at the 401k broker/record-keeper/whatever would share this information with you; and (2) that the employer would set up a SH plan if (even in only his mind ) there would be no other individuals eligible.   

15 hours ago, jpod said:

Lenny, hold on a second.  Nobody likes to be taken advantage of, but I will throw this out for you.  First, you better be 100% sure that the facts you think you have are accurate, otherwise you will probably be fired (I know I would fire you).  Second, assuming you have all the facts correct, your employer may fire you anyway.  Yes, that would be illegal under Section 510 of ERISA, but is this aggravation worth it for a 3% of pay contribution?  Third, even if your employer agrees to fix the problem and doesn't fire you, what would your work days be like going forward after you have dropped a dime on your employer?  Unless you are prepared to have a miserable existence at work or quit your job, i would think carefully about contacting the DOL (because of a very modest 3% of pay).  

I agree that going to the DOL is not something to be done casually and should be an absolute last resort.  And that the poster should be 100% certain of his position.  But ultimately, I don't advocate for just ignoring it "because of a very modest 3% of pay."  I'd like to assume that's not what you meant but that's how it came across.  It is anathema to everything we do as pension professionals, IMO.

I kinda did mean it.  If he likes his job or his compensation, or better yet both, I was suggesting that he think about this practically.  Not really legal advice or other professional advice, just something I might say to a friend or one of my children.   

I agree. Employers generally have a great ability to make your life miserable, even if they don't fire you. I think Jpod's point is well taken - just make darned sure you are prepared for the possible ramifications if you do pursue this. Is it worth it? Maybe, maybe not. Only you can answer that. I'm obviously not advising either way, and these are all just informal opinions on a discussion board.

Ok so I should of stated that I know for a fact that he had this plan.  How do I know??  I helped him with the paperwork to end the plan.  He was getting frustrated with the broker and asked me to help him call her.  I also failed to mention that this guy thinks he can do whatever he wants.  He thinks he does not have to file any rules.  He does not pay overtime to anyone.  He refuses to pay it he lets the girls leave 2 hrs early every Friday and thinks this will make up for any overtime they may have worked that week.. fine for the girls if they are ok but not legal in state of CA/.He also does not have a time clock to document any of this.  I've known about the 401 K plan for a few months.  I know that if I bring to his attention he will get very rude and upset like he has in the past.  He admits to having a 401 K just not the safe harbor kind and he claims he lost money on it so he was going to end it.  I was told I would be able to contribute soon to it a few years ago and then when it came time to do so he said he can't afford it.  He has 3 employees..  He again thinks he does not have to follow rules at all.  When I called the broker she informed me that the only reason she is helping him is because nobody will talk to him in her office anymore because he is so rude to them and he thinks they have to do all of this work for him. She said his accountant/payroll should be helping him with this but they fired him a few months prior and he told us he fired the accountant.  He ws questioning the fees that were on the bill that he got and asked me to ask her what they were.  There was a safe harbor fee of some sort and he wanted to know what that was so she said he asked you to aks me this?  I said yes so she just told me all the charges and what they all meant. She asked me if we all got the form he has to provide to us at the end of the year and I laughed and said no.  She said have you ever got the form and I said nobody has ever got anything in our office on this.  Since he was ending plan she needed dates of hire and dates of termination and date of birth for all employees.  She was really shocked that he told me to call her she even asked him to verify that I could talk to her and he said ok. 

I have been very loyal to this man and he would never think I would do anything to him.  I have worked about 10-20 hours of overtime a week for about 3 years and have never been paid a dime for it.  SO I stay after hours because we are so short staffed and I do billing and posting and he is well aware of this and he never pays me a cent of this.  I have never complained because I was in this with him since the beginning and I felt like I was helping him build his practice.  I was very loyal to his dad who previously employed me.  They call me family.  He has so much trust in me... Until now.  He already fired me last week a day after my mom died.  So I have been keeping this 401k information to myself until he screwed me over and he did.  My mom got lung cancer and within a year she passed away.  During this last year all my dedication and loyalty did me no good if I missed work for her chemo or doctors appointments he would flip out if I was sick he would call me to see when I was coming in to office he never leaves me alone.  I am totally ok with the termination but now the 401k needs to be addressed and the overtime. He also won't pay me my 2 weeks paid time if Im terminated per my contract. also wont pay me for the things I bought for office I sent him receipts.  

Oh and the 401 K paperwork I have copy of everything that shows how much he put in for himself and also copies of paperwork that claim no employees are participating.  Its principal this guy always doing wrong to people who work for him.  He doesn't give us health insurance no overtime pay hes cheap and he thinks he doesn't have to follow rules. 

I found the form on the website that shows he had a plan in 2017.  It says there were 3 participants.  That would of been him, me and one other employee that was never offered anything.  So will it show 3 participants even if we did not put anything into the plan?  We are eligible at our 1 year date but again never offered.  

So I explained more about him.. Normally this is not my way to handle things.  Lenny is short for Lenora, not that it matters if im male or female but with him I think sometimes it does.  He does not like being told what to do by anyone especially a female.  This is the same man that proceeded to tell a employee after learning she dated a African american man that there are proven statistics that show that African american men don't take care of their family's.  I am half African american and half Caucasian and he is well aware of this.  He kept making these "statistics" verbal and after he saw me ignoring the topic goes out of his way to tell me how true it is.  I said you should refrain from involving yourself in these topics since your the business owner and it comes across rude when your office manager is standing right here and she has a African american dad, and brothers who are 100% African american.  I get home that night and I have a email from him with a link to prove his statistic.  I finally lost it and snapped back explaining I'm not doubting the statistic but for me raising 4 boys who are all part African american and trying to make them not a statistic I don't need to hear my employer be rude and only discuss this statistic.  I said how about the statistic about black men in prison and black men that sell drugs and all those??  Im well aware of what the statistics are but I am raising 4 boys to go against that and I don't need emails from my employer. He said to me I was taking it personal and he was just proving he was right..  So this should kind of explain what kind of idiot we are dealing with.  He thinks he won't have any consequences.  Im also looking for attorney for the overtime and unpaid wages  case I have..  Any suggestions will be useful.

On 10/30/2019 at 7:32 AM, Belgarath said:

I agree. Employers generally have a great ability to make your life miserable, even if they don't fire you. I think Jpod's point is well taken - just make darned sure you are prepared for the possible ramifications if you do pursue this. Is it worth it? Maybe, maybe not. Only you can answer that. I'm obviously not advising either way, and these are all just informal opinions on a discussion board.

This is why I held it until after he screwed me over.  I knew it would happen and I knew not to say anything about it until I had all of my things out of office and he has decided to not pay for the office supplies I gave him receipts for so after that I finally brought up the 401k plan and of course he thinks he is above the rules and laws.

On 10/30/2019 at 7:32 AM, Belgarath said:

I agree. Employers generally have a great ability to make your life miserable, even if they don't fire you. I think Jpod's point is well taken - just make darned sure you are prepared for the possible ramifications if you do pursue this. Is it worth it? Maybe, maybe not. Only you can answer that. I'm obviously not advising either way, and these are all just informal opinions on a discussion board.

This is why I held it until after he screwed me over.  I knew it would happen and I knew not to say anything about it until I had all of my things out of office and he has decided to not pay for the office supplies I gave him receipts for so after that I finally brought up the 401k plan and of course he thinks he is above the rules and laws.

Wow.  I'll try to stick to some basic points here.  Understand that most of us on this board are third party administrators (TPAs) or other consultants who help employers run their plans - because the plans are too complicated to run yourself.  The fact that the tax return shows 3 participants is interesting; it implies that there is indeed a TPA or similar service provider involved (sometimes plans are "bundled" where someone is holding the money as well as providing basic compliance support), and that person/company knows about you and the other employee.  If they are any good, they would have an "account" of some sort for you (it might just be a paper account, where they are keeping track of what is supposed to be your money but there might not be a physical account).  OR NOT - if it is set up as a "safe harbor match" plan then he doesn't have to make contributions for anyone else - if they don't make contributions for themselves.  Yes of course there are rules about giving participants the opportunity to contribute, which is likely where this situation goes awry.  My gut says this is the probable scenario.

If he's fired anybody and everybody associated with the plan, he's going to wind up in trouble sooner or later because he won't begin to understand the filing requirements that go with having a plan.  (I think) I'd go back to whomever you talked to who was his contact and see if you can get more specific info.  At some point you probably have to go to the Dept of Labor.  I hope they pay attention - unfortunately it's not simple and might boil down to whether or not he gave you any forms, and it's going to take them some time to really understand it.