Are there any legal restrictions when it comes to the Company not placing their matching fund amount into the employees account? Late last year we were told
the company was changing 401k providers and they also stated that the funds would be placed into the employees account every month rather than quarterly so as
to accrue interest more quickly. We have just found out that the company has not been depositing their matching fund amount into the employees account.
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Company matching funds
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 doone2 |
Company matching funds |
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Posts: 1 (04/01/08 11:34:01) |
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DCK101 |
Matching deadline | ||
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Posts: 361 (04/01/08 14:01:23) Elite Member |
Sounds like the cash flow situation at the company may have gotten a little tighter than previously anticipated. Generally, employer contributions can be
funded at any time up until the due date for the corporation's tax return, including extensions. As an example, for a plan and corporate year ending
December 31, 2008, the company could wait until September 15, 2009 to make the contribution. Additionally, if the contribution formula is discretionary, the
employer is not obligated to make any contribution, even though they may have said they would.
Ask your Plan Administrator about the funding situation. If you get stonewalled, it may mean that money is getting tight for some reason. |
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doone2 |
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Posts: 2 (04/02/08 06:02:59) |
Your reply topic "Matching deadline" leads me to another question. How long can the company hold the employees payroll deduction for his 401k account
before depositing it. Since you brought up the cash flow issue it makes me wonder why they are holding the funds for usually 30 days and sometimes longer. It
seems to me that this should be deposited immediately as this is the employees money and the company should not be able to "use" it to soften their
cash flow issues.
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DCK101 |
Deferral deadline | ||
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Posts: 363 (04/02/08 17:10:34) Elite Member |
There is a Department of Labor regulation that states the deferral contributions must be deposited as soon as the employer can reasonably segregate the funds,
but in no case later than the 15th business day following the close of the month in which the deferrals were taken. The DOL however, generally frowns on
employers consistently holding the funds near that long. If it is found that the employer could have deposited the funds sooner, there are penalties assessed
against the employer as well as interest due to the participants accounts.
If the situation is really out of hand, and you fear it may get worse, you might want to contact the DOL to see if they can look into it. So I called this one "Deferral deadline" |
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