Employer never contributed

My wife has been enrolled in her employers 401k for 5 years. She just realized they they have never deducted from her check nor made a contribution in that time. The 401k is active but her employer states it is not. We’ve come to learn her employer never gave her name to the payroll department of the 401k company. Is she still entitled to the match even though they never took money out of her paycheck. She’s enrolled in 4% deduction to get a 3.5% match. We are willing to deposit money to get the match

How do you not notice for 5 years that no 401(k) deductions are coming out of your pay check? And how do you not ask for a statement for the 401(k) account you thought you signed up for?

There are IRS fixes for failure to implement a deferral election but you  probably have to show that you did turn in a valid enrollment form that your employer failed to implement. That said the fact that you are just now bringing this up 5 years later will likely not work in your favor.

The account has been confirmed active. We have all paperwork. She never checked just like her accounting department never checks their monthly list of participants coming from the 401k company. Thank you

12 hours ago, Mikefern said:

The 401k is active but her employer states it is not.

Clarification needed.  Is the ER stating the plan is frozen (or frozen to new participation)?  If so, the effective date of freeze will be relevant.  Does this quote mean something else?  The participant needs to get a copy of the Summary Plan Description (SPD).

She has all the paperwork showing that her 401k has been active and setup since 2015. The problem is that her company’s accounting department put her name on the payroll list that goes to the 401k company. No money has ever been withdrawn from her check nor has there been a match. How can this be fixed?

2 hours ago, Mikefern said:

She has all the paperwork showing that her 401k has been active and setup since 2015. The problem is that her company’s accounting department put her name on the payroll list that goes to the 401k company. No money has ever been withdrawn from her check nor has there been a match. How can this be fixed?

You can go to your employer or to an attorney or to the DOL at this point and ask for help.

But I don't have a lot of sympathy for someone that goes 5 years and doesn't look at a paycheck or question a w-2 or ask to see a statement or doesn't go online. It's incomprehensible to me to go that long.

I get it. I’m not looking for backlash from anyone. It’s bad enough. Just looking for some useful insight. Thank you

You're going to get opinions here from the perspective of people who are generally on the employer's side when these kinds of mistakes happen. The idea that the little guy (the employee) should at the very least share the blame, if not shoulder all of it, for what is primarily the employer's (or the employer's service provider, i.e., the people you're talking to here) mistake is deeply ingrained. This notion is even supported somewhat by the IRS's fix for this sort of thing.

OTOH, this is a common mistake and assuming your wife made a proper deferral election the fix is that she probably has some money coming to her. She should start by talking to whoever at her job is in charge of the plan. Ultimately, you'll have to decide whether the fix they offer feels satisfying or whether you want to spend some money on independent professional help that answers to you (like a lawyer) to find out for sure if it's fair. A do-it-yourself sort of a guy might be able to get the general idea of what the fix should look like by googling something like "employer didn't withhold 401(k)" and then focusing on authoritative results like the IRS.

Thank you!

23 hours ago, Mikefern said:

My wife has been enrolled in her employers 401k for 5 years. She just realized they they have never deducted from her check nor made a contribution in that time. The 401k is active but her employer states it is not. We’ve come to learn her employer never gave her name to the payroll department of the 401k company. Is she still entitled to the match even though they never took money out of her paycheck. She’s enrolled in 4% deduction to get a 3.5% match. We are willing to deposit money to get the match

In all these messages, you have not provided the most important information.  In order to participate, you wife had to make an election to have a certain amount withheld from her pay and contributed to the plan. Nowhere do you say she did that.  We don't know what you mean by "she's enrolled". Very specifically: did she make a valid election of deferral?

Did she?  How did she do it?  Do you have a copy of the deferral election?  You obviously knew about the 401(k), but unless she made an election to have withholding, it doesn't happen.

4 minutes ago, Larry Starr said:

In all these messages, you have not provided the most important information.  In order to participate, you wife had to make an election to have a certain amount withheld from her pay and contributed to the plan. Nowhere do you say she did that.  We don't know what you mean by "she's enrolled". Very specifically: did she make a valid election of deferral?

Did she?  How did she do it?  Do you have a copy of the deferral election?  You obviously knew about the 401(k), but unless she made an election to have withholding, it doesn't happen.

Larry, check out this sentence from the OP's last post:

"She’s enrolled in 4% deduction to get a 3.5% match."

Yes, 4% deduction from check and 3.5% match. The 401k company gave us copies of all documents and wrote a letter on company letterhead attesting to everything done right on her part. My wife’s company never incorporated her name on a payroll list that is sent to the 401k company every month. 401k company said it’s my wife’s employers accounting departments fault. Can this be fixed?

If the employer stonewalls your wife,  call your Regional Office of the Department of Labor's Employee Benefits Security Administration  They will get the employer's attention.  They handle these  issues frequently.

17 minutes ago, Mike Preston said:

Larry, check out this sentence from the OP's last post:

"She’s enrolled in 4% deduction to get a 3.5% match."

Mike, I definitely saw that.

My concern is this participant spouse saying "she's enrolled" and not understanding that an actual deferral election was required and hasn't told us that she did fill out such an election and has copies to prove it.  IF that is the case, then she has a case.  If that is NOT the case, she is not "enrolled" in anything.  I don't trust the language "she's enrolled".

18 minutes ago, Mikefern said:

Yes, 4% deduction from check and 3.5% match. The 401k company gave us copies of all documents and wrote a letter on company letterhead attesting to everything done right on her part. My wife’s company never incorporated her name on a payroll list that is sent to the 401k company every month. 401k company said it’s my wife’s employers accounting departments fault. Can this be fixed?

Does the record keeper actually have copies of a deferral election made by the participant? That is what I am trying to get a simple answer to. You didn't provide us details of what "all the documents" means, and without the deferral election itself, it doesn't mean anything.  You might be absolutely right; but until we have at least your verbal agreement that there was an actual deferral election signed and you have a copy, I'm afraid you have no case. 

Vanguard funds does. I don’t care what the employer says at this point. They’re just trying to cover their asses

5 minutes ago, Larry Starr said:

Does the record keeper actually have copies of a deferral election made by the participant? That is what I am trying to get a simple answer to. You didn't provide us details of what "all the documents" means, and without the deferral election itself, it doesn't mean anything.  You might be absolutely right; but until we have at least your verbal agreement that there was an actual deferral election signed and you have a copy, I'm afraid you have no case. 

She has it. So now what? 

In addition. She also has emails with the former HR director. It clearly shows she was enrolled

3 hours ago, Mikefern said:

Vanguard funds does. I don’t care what the employer says at this point. They’re just trying to cover their asses

Once again, not an answer; do YOU have a copy of a signed election form from when your wife thinks she signed up for salary deferrals.  That is a yes or no answer. If there is an election and Vanguard has it, you need to have it.  You NEED to care what the employer says (right or wrong) if they are contesting your claim.

3 hours ago, Mikefern said:

In addition. She also has emails with the former HR director. It clearly shows she was enrolled

What part of "do you have a copy of the deferral election signed by your wife back when she thinks she should have started having money taken out of her payroll check" is unclear?

3 hours ago, Mikefern said:

She has it. So now what? 

Hosanna!  Are you saying you have a copy of the deferral election signed by your wife back when she was under the impression she was signing up to have deferrals taken out of her paycheck?  A simple question actually.  If you can confirm you have that actual document, I'd be happy to share with you what *I* think is the next step.  I take on cases like this as a consulting job, but not until I know the facts, which is all I am asking  of you. And this will be the last time I ask.

4 hours ago, Mikefern said:

She has it. So no? 

By the way you know read info given to you and the way you treat people, I’d say you no thank you

You might want to tone down your rhetoric. This is a professional forum by professionals primarily for professionals. They are gracious enough to occasionally try and help the members of the public deal with issues. You are new member who has registered and only posted in this one thread.

Usually when someone visits someone else's house they conduct themselves with manners and respect. Maybe the employer is at fault, but it has been like pulling teeth to get straight answers. Yet you have failed to demonstrate that you understand just how much responsibility you and your wife share in for this disaster.

It is mind boggling how your wife can not know for five years that her deferrals have no been deducted from her paycheck. It is mind boggling that you can not know what your joint investment portfolios are doing over five years. You never checked to see that contributions were deposited and what the earnings were over time.

Your conduct in this thread is not likely to inspire professionals to take time out of their busy days to receive abuse in return for their attempts to help.

Looks and read every post. The question was answered. M. Starr got fired up and went off. Read each post from the top. I clearly stated she had the form 4 hours before he sent 3 messages indirectly insulting me. Now you’re jumping in. How about giving some guidance or are you an ambulance chaser too

Brother, there were rude blowhards and their fan club around here long before you got here, and they'll be here long after you've moved on with your life. It ain't you.

Hmmm. I need to get some popcorn for this thread!

This is a professional blog for other professionals.  I don't understand why the spouse of an employee got on this blog.  And now he is insulting us.   He (the spouse) needs to get out his wallet and hire an ERISA attorney.

On 4/11/2020 at 7:47 AM, Mikefern said:

Looks and read every post. The question was answered. M. Starr got fired up and went off. Read each post from the top. I clearly stated she had the form 4 hours before he sent 3 messages indirectly insulting me. Now you’re jumping in. How about giving some guidance or are you an ambulance chaser too

Time for all the professionals to stop responding to this individual.  Wonderfully said spiritrider!

1 minute ago, Patricia Neal Jensen said:

This is a professional blog for other professionals.  I don't understand why the spouse of an employee got on this blog.  And now he is insulting us.   He (the spouse) needs to get out his wallet and hire an ERISA attorney.

 

Amen.

davebaker@benefitslink.com

Dave.... It is a problem to permit participants and/ or their spouses on this discussion board.  Could you please inform Participants and their relatives that this is not an appropriate place for resolving their problems?  Thank you!

Patricia Neal Jensen

QBI/Ascensus

3 minutes ago, Patricia Neal Jensen said:

davebaker@benefitslink.com

Dave.... It is a problem to permit participants and/ or their spouses on this discussion board.  Could you please inform Participants and their relatives that this is not an appropriate place for resolving their problems?  Thank you!

Patricia Neal Jensen

QBI/Ascensus

 

Yes, that would be great if there were some sort of warning message to people trying to post as to the intention of the board.  I would love not to have individual participant questions.

@Dave Baker

Including a notification to Dave for this thread.

I don't think it is necessarily inappropriate for a participant to come here to ask questions.  Many have simple questions and just don't know who to ask or where to turn for information.  I agree that it is inappropriate to try to resolve specific participant issues or lay blame on someone through the message boards.  We never have all the information, and we only get one side of the problem.

To that end, maybe just have Mods lock a specific thread when it gets combative and insulting, rather than not allowing questions from non-industry folks all together?

18 minutes ago, RatherBeGolfing said:

I don't think it is necessarily inappropriate for a participant to come here to ask questions.  Many have simple questions and just don't know who to ask or where to turn for information.  I agree that it is inappropriate to try to resolve specific participant issues or lay blame on someone through the message boards.  We never have all the information, and we only get one side of the problem.

I agree.  Anyone who wants to ignore such posts is free to do so.  

2 minutes ago, Bird said:

I agree.  Anyone who wants to ignore such posts is free to do so.  

My suggestion was some sort of "warning" message at sign in of what the purpose of this system is.

Suggest that the OP review page 33 and 94 as found in Revenue Procedure 2019-19.  Here's a link to that Rev. Proc.  https://www.irs.gov/pub/irs-drop/rp-19-19.pdf  Then, if that explanation doesn't fit your situation, explore other sections to see if they fit.  Finally, obtain counsel that is knowledgeable with this type of issue.  If you really want to have this issue addressed then do your research and get qualified professional help.  Good luck.

Another thought for the original poster - sometimes the enrollment form has to go to two places.  So, if it has both deferral elections (i.e. how much you want to contribute) and investment elections (where you want the money to be invested) it needs to go to the employer so they can enter the deferral election into the payroll system, AND it has to go to the investment provider so they can set up the investment account properly.  SOMETIMES sending the form to one place will get everything done, but not necessarily.  It could very well be that you (or someone who didn't know any better) sent the form to the investment provider but the employer never saw it.  In that case you might just say "lesson learned" and start now - I don't see any fault on the part of the employer.

There are multiple parties involved, sometimes wearing different hats but sometimes one wears multiple hats:  your employer, the payroll company, an investment provider (that may also be providing "recordkeeping" and/or third party administration services) and perhaps a third party administrator.  I'd submit that the combination of a small employer (that doesn't  necessarily know what they are doing) and a large investment provider (that doesn't have the time or inclination to look at a form and say "mmm, I wonder if this went to the employer) is a recipe for this kind of error.

22 hours ago, Below Ground said:

Suggest that the OP review page 33 and 94 as found in Revenue Procedure 2019-19.  Here's a link to that Rev. Proc.  https://www.irs.gov/pub/irs-drop/rp-19-19.pdf  Then, if that explanation doesn't fit your situation, explore other sections to see if they fit.  Finally, obtain counsel that is knowledgeable with this type of issue.  If you really want to have this issue addressed then do your research and get qualified professional help.  Good luck.

Below ground. Thank you for your expertise. You are spot on! We’ve contacted the DOL and they stated the same. The problem is being solved as this was an internal error. Thank you

On balance, I think it's worth having questions come in from participants and beneficiaries (and ex-spouses) because we're often able to do so much good for many of these folks. The message boards are picked up by Google, so people find us. My thinking has been that having public message boards is better on balance than having private message boards, though certainly a members-only model would have some benefits. Others who find us via Google are employers (some of whom are potential clients) and other benefits professionals (who may be sources for referrals). In order to register, one has to answer the question, "What is the name of the federal law governing employee benefit plans that was signed into law by President Gerald Ford on Labor Day in 1974?" The idea is to weed out the folks who aren't sincerely interested in getting help. It prolly takes only a quick Google search, but still...

The occasional rudeness goes with the territory nowadays.... I know the best strategy is to refrain from feeding the trolls, but I often get hooked by some anonymous comment on Twitter and rant back. Perhaps people are short-tempered in part due to the virus. I know I am getting sick of my cat climbing on the keyboard and pressing random keys. Sometimes it's just the inherent difficulty of communicating via text, without the benefit of tone of voice or facial expression. Did I read somewhere that the latter two factors make up something like 80% of the content in communication? But I also can't blame a person who just wants to ask a question or make a point without all the ribbons and powder, whether or not it comes across as gruff. Free country, and all that.

Remember that if you ever regret a post, you can go back and edit it or even delete it (or let me know, if you don't yet have such super powers on account of your moderator or senior contributor status).

Would it be a good idea to come up with standard disclaimer language, though, to which we could link when answering questions from non-professionals? I'm thinking that a link could appear at the bottom of each reply in a message thread that was started by a non-professional -- something like: "WARNING: All of my comments and other information are provided as a courtesy only. While I hope they are helpful and believe they are accurate, they are offered with no guarantee of their accuracy either in general or in the questioner's particular circumstances. Often there are other relevant and important facts and circumstances that have not been asked or discussed, for example, which would affect their accuracy. They are provided on the express condition that the questioner should not and cannot rely upon them as legal advice from me or any firm with which I am affiliated. You should seek independent legal counsel if you would like advice upon which you can rely, for which you'll probably need to pay a fee."

42 minutes ago, Dave Baker said:

I know I am getting sick of my cat climbing on the keyboard and pressing random keys.

Kids and dogs make for an interesting work from home experinece as well...

Feline equivalent of "nose to the grindstone" perhaps.

 "I know I am getting sick of my cat climbing on the keyboard and pressing random keys." Too funny. I was in the midst of sending my boss an e-mail when the cat tromped across the keyboard, and I sent an e-mail of mostly gibberish. Probably  a new acronym is about to be invented, like PIE (pet induced error) or something like that.