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Author: masterwjm Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: Is my employer breaking the law? Date: 7/24/2001 6:14 PM
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I recently started working for a new employer and began investing in their 401K as soon as I started. My contribution is deducted from every paycheck (every 2 weeks), but it is not automatically deposited in the 401K account. In fact it is not deposited, according to the HR guy, until 15 days after, the month after, it is deducted (usually 45 days). Is this legal? Is there anything I can do about this?

Thanks in advance for any advice or suggestions.
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Author: BookmFool Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 30965 of 74759
Subject: Re: Is my employer breaking the law? Date: 7/24/2001 7:33 PM
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Hello masterwjm:
My contribution is deducted from every paycheck (every 2 weeks), but it is not automatically deposited in the 401K account. In fact it is not deposited, according to the HR guy, until 15 days after, the month after, it is deducted (usually 45 days). Is this legal?

45 days? Hmmm. The general timeframe is 15 days from the day it's removed from your paycheck. Here's a post to a thread on the subject, from the Foolish 401k message board:

http://boards.fool.com/Message.asp?mid=14569343

Pay attention to W401k's response on the matter, which I believe is the 3rd response.

HTH

Bookm

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Author: BookmFool Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 30966 of 74759
Subject: Re: Is my employer breaking the law? Date: 7/24/2001 7:35 PM
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Hello masterwjm:
My contribution is deducted from every paycheck (every 2 weeks), but it is not automatically deposited in the 401K account. In fact it is not deposited, according to the HR guy, until 15 days after, the month after, it is deducted (usually 45 days). Is this legal?

45 days? Hmmm. The general timeframe is 15 days from the day it's removed from your paycheck. Here's a post to a thread on the subject, from the Foolish 401k message board:

http://boards.fool.com/Message.asp?mid=14569343

Once you get to this message, click on the word "threaded", and just go through the thread. Pay attention to W401k's response on the matter, which I believe is the 3rd response.

HTH

Bookm

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Author: Charlie48K Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 30967 of 74759
Subject: Re: Is my employer breaking the law? Date: 7/24/2001 8:08 PM
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In fact it is not deposited, according to the HR guy, until 15 days after, the month after, it is deducted (usually 45 days). Is this legal?

It's the 15 business day not calendar day. See 29CFR2510.3-102

http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=29&PART=2510&SECTION=3-102&YEAR=2000&TYPE=TEXT

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 30979 of 74759
Subject: Re: Is my employer breaking the law? Date: 7/25/2001 6:44 AM
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Greetings, Masterwjm, and welcome. You asked:

I recently started working for a new employer and began investing in their 401K as soon as I started. My contribution is deducted from every paycheck (every 2 weeks), but it is not automatically deposited in the 401K account. In fact it is not deposited, according to the HR guy, until 15 days after, the month after, it is deducted (usually 45 days). Is this legal? Is there anything I can do about this?

As I said in this week's column, "Timely 401(k) Deposits" at http://www.fool.com/retirement/retireeport/2001/retireeport010723.htm :

QUOTE

The Department of Labor (DOL), through the Pension and Welfare Benefits Administration (PWBA), protects the integrity of pensions, health plans, and other employee benefits. Included within that mandate is oversight of 401(k) plan administration. Currently, DOL regulations require that sums withheld from an employee's paycheck for the purpose of making a contribution to a 401(k) plan must be deposited in the participant's account "as of the earliest date on which such contributions can reasonably be segregated from the employer's general assets." That date may not be later than the 15th business day of the month following the month in which the payroll deduction occurred.


To clarify what that gobbledygook means, consider a plan participant who was paid on every Friday during the month of June 2001. That person had five paydays, meaning a 401(k) contribution was deducted five times in that month, the last on June 29. Legally, the employer has until the 15th business day of July -- or until Friday, July 20 -- to get those payroll deductions into the participant's 401(k) account. In theory, then, the payroll deduction that occurred on June 1, 2001, doesn't have to reach the participant's account until seven weeks have passed, or 49 days after the money was first taken from the employee's paycheck.


Note, however, that this deadline is an extreme. It is not intended to be the rule. In reality, the DOL says the money must be transferred to the plan trustee as soon as it's administratively feasible. In fact, if that doesn't happen, then a DOL audit of the plan could result in a heavy fine to the employer. That fine may be quite expensive, too. For an example of how seriously the DOL takes this issue, just review the PWBA press release that covers one such settlement.

UNQUOTE

If you think this proviso is being violated, see the column for actions you may take to rectify the situation.

Regards..Pixy



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Author: masterwjm Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31068 of 74759
Subject: Re: Is my employer breaking the law? Date: 7/31/2001 1:36 PM
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Ok, after reading all of the replies everyone sent out (Thanks!) I have pretty much figured out that my employer is definitely breaking the law. My question now is how I should go about rectifying this problem.

In TMF Pixy's article, http://www.fool.com/retirement/retireeport/2001/retireeport010723.htm he suggests writing a polite letter to my employer outlining the problems and requesting action on their part. My concern is that by 'rocking the boat' I may be targeted for dismissal. Is there a way of notifying my employer of my concerns anonymously? Should I try to go to the PWBA regional office and notify them anonymously to audit my employer?

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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31070 of 74759
Subject: Re: Is my employer breaking the law? Date: 7/31/2001 2:21 PM
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There are "whistle-blower" laws that protect employees who report wrongdoing from being targeted. Still, if that's how you feel about your company, you should start looking for another job.

I think that trying to hide behind anonymity:
a) will be ineffective at preserving your employment, and
b) will cause your employere and PWBA to take your complaint less seriously.

You should also be looking for a good lawyer who specializes in pensions and the whistleblower laws.

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Author: wisenlucky One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31073 of 74759
Subject: Re: Is my employer breaking the law? Date: 7/31/2001 3:11 PM
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masterwjm,

I am fairly certain that your employer is NOT breaking the law.

As you can see from the response posts, your employer has 15 business days after the end of the month during which the funds were withheld to remit them to the plan. That means that funds withheld on July 1, 2001 do not have to be remitted until Aug 21, 2001.

I am the plan administrator at my employer, and I know that it was a very difficult task to prepare the necessary submission documentation with our old computer system. It essentially had to be prepared by hand, keying all the data in a spreadsheet. As a result, I only submitted the information (and funds) once a month, beginning the process on the first of the following month. Allowing for mail time, I always met the deadline.

Our new system allows me to output the information directly into a spreadsheet for submission, so I submit it every payday.

Your employer seems to be taking every bit of their time, and could possibly process the payment faster. But they may not be able to complete everything any faster. I would hate to see you damage your relationship if they really need the time, and if you otherwise like your job.

Yes, they can't legally punish you for complaining, but you know and I know that things happen. If I were you, I wouldn't go any further. But, as usual, that is just my opinion.

WiseNLucky

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Author: masterwjm Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31082 of 74759
Subject: Re: Is my employer breaking the law? Date: 7/31/2001 6:23 PM
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Sorry WiseNLucky I should have updated the circumstances.

I haven't had a contribution to my plan since 5/17. That means they have missed both the 6/21 and 7/21 deadlines already.

I have asked the plan administrator about when the next installment should go in and he said "Last one went out two weeks ago. Problem with posting until we know what we are doing with the company change. I will keep you advised." Company change refers to the company going from LLP to LLC. This transition was supposed to have occured on July 1 and in fact I got my most recent paycheck from the LLC name about two weeks ago. Regardless, it shouldn't have anything to do with the 6/21 deadline which should have been submitted *before* the name change occured.

Therefore, I have concluded that they are breaking the law and want to correct the problem. I don't, however, want to jeopardize the relationship and would therefore like to bring this up in an anonymous (or at least non-threatening) manner.

Thanks for the info about what it is like to be an Administrator. It sounds like a thankless job. My employer is only about 2 years old and uses ADP for payroll processing. I would *assume* it would be rather simple for them to administrate the 401(K) submissions since I am sure ADP can easily show them the deductions, but I may be wrong.

Thanks for the info, if you have any more thoughts i would love to hear them.

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