Called Employer on delayed 401K contributions - benefitted all employees

[Mother Fussbudget]

In 2016, most months would have my contracting firm employer generating our paychecks on-time on the 15th of the month. After a delay of a few days 401k contribution in the on-line 401k account - usually showing up around the 22nd.  After June 2016, those 401k 'delays' were longer than normal.  Twice (2x) 401k contributions didn't  show up until 2 months later.  In those two cases, contributions only showed up AFTER I contacted (emailed) the HR benefits person to point out the delay.  Once pointed out, deposits 'magically' appeared... post-dated as if they had been contributed on the 15th of the month where the contribution was deducted. (!)

This seemed wrong to me.  I pointed out that employees were losing earnings those dollars might have earned by being invested during the 2+ months they were 'in-process'. 

After Jan 1st, HR sent a firm-wide email explaining that on two (2x) occasions 401k deposits were 'inadvertently delayed' , AND:
1) the company has corrected the issue, AND...
2) the company will deposit a one-time 'make-up' deposit into employee's 401k accounts to account for the potential loss of return on investment during the time the funds weren't in employees' accounts!  This is something I hadn't known was possible.

By tracking my own 401k (logging into the account twice a month), I noticed a discrepancy, and that benefitted ALL the consultants at my firm.

[dandarc]

Well done!

[Gimesalot]

Badass!

[Beardog]

Hooray for Mother Fussbudget !

[Dicey]

A nice deposit to your 401k account and another at the Bank of Good Karma. Well done!

[Secretly Saving]

Awesome! Well done.  This is a huge pet peeve of mine and one that we're dealing with at the moment.  I'll be pushing again to get this problem remedied.  You gave me hope for an improved situation!

[Metric Mouse]

Awesome!

[JumpJ]

Timely remittance of employee contributions was a hot button issue for the Department of Labor in the early 2000's.  Likely your employer consulted their third party administrator or an ERISA attorney after your "complaint" and realized they should rectify the issue quickly and correctly.  The issue is usually identified by a knowledgeable employee (kudos!) or if the Plan is large enough sometimes the CPA firm who performs the yearly audit will identify them.  Prohibited transactions are also required to be disclosed in the Form 5500 filing so it is not a good look for the Plan sponsor to be involved in them.

Either way you got her done and I would imagine the contributions will be timely going forward!

J 

[Mother Fussbudget]

Either way you got her done and I would imagine the contributions will be timely going forward!

J

Funny you should mention that.  Just like the old days, January's contribution showed up on 1/24/2017...  ;-)

[smacpa]

Mine are routinely 10 days after payroll deduction.  I imagine this is within the margin or reasonableness.

The employer match contributions only come in once a quarter though, I also imagine this is directed by the plan document although I would like to confirm.

[RobFIRE]

Well done!

I'm paid monthly on 25th, in 2016 my pension contributions arrived the following month on 8, 8, 7, 7, 9, 13, 7, 9, 19, 7, 12th of the month for January to November (salary paid early in December so I'll ignore that). Which I think is pretty poor really, I don't see why it should take more than about three working days for the money to arrive and be invested. I can't really imagine anybody in my company's HR department giving a stuff about it though (if they even understand what I'm asking)!

[Metric Mouse]

Mine are routinely 10 days after payroll deduction.  I imagine this is within the margin or reasonableness.

The employer match contributions only come in once a quarter though, I also imagine this is directed by the plan document although I would like to confirm.

Does it take ten days for your paycheck to reach your account? I can't imagine any reason that it would take two weeks of business days for this type of money to transfer into an account.

[skeeder]

Keep an eye on this, every financial advisor knows that ERISA (Employee Retirement Income Security Act) requires deposits be made into your 401k account 'as soon as administratively possible'.  IRS came out to say longer than 2 weeks is unacceptable and the compliances audits have penalized companies for being more than a week late. 

Basically, not only did you save your fellow employees, you may have saved them a finding in a 401k audit and consequently a fine.

[Mother Fussbudget]

Sorry to revive this old thread, but there have been interesting developments...

Today, a company-wide email was sent that states the following.  (Edited for anonymity)

This is an update to the initial email that was sent out regarding your 401(k) contributions last month:

Next Steps: HR is in the process of calculating loss of earnings. Once these calculations have been reached and confirmed, you will receive a deposit directly into your 401K account. We anticipate conclusion of the calculations and deposit of funds by 2/15. In addition, we have concluded a root cause analysis of the error and are working diligently with our payroll and 401K vendors to ensure the error will not (and cannot) happen again.

Update: The calculation of loss earnings has been completed. After payroll is posted tomorrow, 2/15/17 – the 401(k) upload of your payroll contributions to the vendor will take place within 5-7 business days. The loss earnings will be a separate deposit that will post to your 401(k) account within 5-7 business days.

If you have any questions, please feel free to reach out to me directly. We appreciate your patience and understanding while we get this corrected.

[SimpleCycle]

Yes, this is the proper required remedy per the Department of Labor.  There is a voluntary compliance program that allows employers to correct errors/delays, but it does require lost earnings be paid to employees.

Glad you looked into it - it paid off for everyone!

[Mother Fussbudget]

Update:
The totals came in.  I will receive $20.08 to my 401k for 'lost opportunity costs'.

Here was the breakdown:
15-Oct     15-Nov     Grand Total
$13.47     $6.61       $20.08

NOTE:  they didn't mention the other time this occurred in June & July (deposit arrived for both months in August), but I'm willing to let that slide.
Now I'm watching to see if they post "new" investment$ on the date received, or back-date them to the 15th of the month (as I suspect they will.  LOL!)

[JumpJ]

Mother Fussbudget, every dollar helps!  Great for you (and the others who benefited)!

My employer had in excess of 25 employees in 2016, so our grandfathered SARSEP is no longer an option.  Off to crappy ADP 401(k) land we go...assuming the plan ever gets implemented.  I intend to advocate, just like you did for a better plan for all in 2018!