401k mistake by employer
Hi Terry
I submitted a request to have 50% of my bonuses deposited into my company 401k account, pre-tax. I did this last year in preparation for my annual bonus that I receive in March. Well, found out that the HR manager never submitted the paperwork to complete the change even though I let him know that I had submitted the request. Since then that HR manager has been released from the company. A new HR manager has taken over and says that there is nothing that can be done to recover the money it’s basically been donated to taxes which I was trying to avoid. It was over $8700. Do you know if there is any action that can be taken so I can get the money deposited into my 401K account?
Thank you
Terry Says
The year has passed and the contribution was not made according to your instructions, and now you owe taxes– do I have that correct?
And the company knew the HR manager was negligent in this or other ways, and fired that person.
There is nothing anyone can legally do about last year’s mistake; they can’t go back and put the contribution in and reduce your salary.
They would open the door to a lot of other potential claims if they gave you an extra bonus this year to at least partially make up for their mistake.
But you could ask them to do that. Or, you could report them to the Labor Department (which regulates corporate plans) or threaten to sue them for their negligence. Then you’d be out of a job.
And now it’s too late to make a deductible contribution to an IRA for last year, as well, assuming you were qualified.
My advice: Forget it and move on.
The lesson learned: Stay on top of your 40l(k) plan on a regular basis, not only for the investment decisions, but to be aware of any missing contributions.
