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Message
Can an employer change 401k contributions?
Posted on 7/6/14 at 9:09 am
Posted on 7/6/14 at 9:09 am
So I work as a travel nurse with a company that offers 401k and employer match. I was promised 10% match of my contribution. I put in 33% of my pay in each week. From last September to December, my company has matched 10% of my contribution.
After the 1st of the year, on my pay stub I was getting 7.5%. I looked at my 401k and all I was getting was 5%.
So, can your employer just change their contribution without notice?
And it is about $600 which I am short from employer match, which turns into $20K over the course of 37 years when I retire with a generous 10% return each year.
BTW my paystub since the 1st of the year is still saying they are matching 7.5% (I just caught it today), and that is what they are saying they are contributing. The 401k company, Fidelity, website says they only match 5% of my contributions. What actions can I take to get the money back?
After the 1st of the year, on my pay stub I was getting 7.5%. I looked at my 401k and all I was getting was 5%.
So, can your employer just change their contribution without notice?
And it is about $600 which I am short from employer match, which turns into $20K over the course of 37 years when I retire with a generous 10% return each year.
BTW my paystub since the 1st of the year is still saying they are matching 7.5% (I just caught it today), and that is what they are saying they are contributing. The 401k company, Fidelity, website says they only match 5% of my contributions. What actions can I take to get the money back?
5
Posted on 7/6/14 at 10:02 am to akimoto
quote:
After the 1st of the year
quote:
Posted on 7/6/14 at 9:09 am
Should have waited until the end of the year to ask this question.
On a serious note, you should talk to your HR department and see what is going on. They probably sent an email or letter that you didn't read thoroughly that would explain it.
Posted on 7/6/14 at 8:37 pm to LSUSUPERSTAR
So a few things here. First if you are putting in 33% you may be maxing out. Next my understanding is that a plan can change yearly.
Posted on 7/6/14 at 8:56 pm to akimoto
Yes. My company votes yearly on 401k match.
This post was edited on 7/6/14 at 8:57 pm
Posted on 7/7/14 at 11:17 am to AUCE05
Yes, a match can be discretionary. They have complete control over the formula they use to calculate match.
Posted on 7/7/14 at 11:52 am to CaptainJ47
quote:
So a few things here. First if you are putting in 33% you may be maxing out. Next my understanding is that a plan can change yearly
He may be maxing out his part but...
quote:
Yes, a match can be discretionary. They have complete control over the formula they use to calculate match
The company can match to take the total contribution up to $52000 at their discretion.
Posted on 7/7/14 at 12:57 pm to akimoto
my company matches 6% each month or quarter (i forget), and then can do a discretionary match at the end of the year for up to another 4%.
It can be really confusing as the will only tell us of changes through the 401k system and its a bitch to figure out what actually changed.
I would call HR, they will know the answer to your question.
It can be really confusing as the will only tell us of changes through the 401k system and its a bitch to figure out what actually changed.
I would call HR, they will know the answer to your question.
Posted on 7/7/14 at 1:34 pm to akimoto
All of the others have summed this up. First, call the HR department and ask about the 7.5% to 5% discrepancy. It may be a simple error and they will correct it.
Second, the employer can change the 401K at any time be it the plan administrator, the available funds or the matching contribution if any.
Lastly, consider yourself fortunate. My experience has been that the average employer match if any in healthcare organizations is less than 4%...
Second, the employer can change the 401K at any time be it the plan administrator, the available funds or the matching contribution if any.
Lastly, consider yourself fortunate. My experience has been that the average employer match if any in healthcare organizations is less than 4%...
Posted on 7/8/14 at 4:01 am to wiltznucs
My biggest concern is that I signed up for this company b/c they told me they would match 10% of my contributions. I do not believe I received any kind of warning saying that the contribution % has changed. I never received the match on paper, but would see it on my paystubs. I started in the last quarter of last year and saw 10% on the stub and received the same in my 401k. I checked this past weekend and noticed 7.5% on my stub, but only 5% on Fidelity.
I am definitely going to max out this year, but my pay for taxes and 401k is only calculated on half of my salary. I do not get taxed on housing and food stipends, d/t being 2000 miles away from my home base. 33% is the number I came up with for working an extra shift and all the money going into 401k and not Uncle Sam.
I just wanted to see if anybody else had a company lower contributions without notice and if I have any legal ground to do something about it. I searched all correspondence to see if a change was coming, but I did not see it.
ETA: Can I at least use my paystub that says they contributed 7.5% for this year as a basis to ask them to make up the difference of the 5% that they actually contributed?
I am definitely going to max out this year, but my pay for taxes and 401k is only calculated on half of my salary. I do not get taxed on housing and food stipends, d/t being 2000 miles away from my home base. 33% is the number I came up with for working an extra shift and all the money going into 401k and not Uncle Sam.
I just wanted to see if anybody else had a company lower contributions without notice and if I have any legal ground to do something about it. I searched all correspondence to see if a change was coming, but I did not see it.
ETA: Can I at least use my paystub that says they contributed 7.5% for this year as a basis to ask them to make up the difference of the 5% that they actually contributed?
This post was edited on 7/8/14 at 4:04 am
Posted on 7/9/14 at 9:54 am to akimoto
quote:
Can I at least use my paystub that says they contributed 7.5% for this year as a basis to ask them to make up the difference of the 5% that they actually contributed?
Absolutely, if nothing else you may get an explanation as to what happened.
quote:
I just wanted to see if anybody else had a company lower contributions without notice and if I have any legal ground to do something about it. I searched all correspondence to see if a change was coming, but I did not see it
Typically companies let the employees know in advance. I'm not sure there is anything requiring them to do so.
quote:
I do not get taxed on housing and food stipends
These benefits if provided to you as reimbursed expenses may be taxable income. When I did travel in healthcare many years ago I was given a daily allowance for food and a monthtly allowance for housing. Whatever I didnt spend was mine to keep. My accountant indicated that I had to report this for tax purposes.
This post was edited on 7/9/14 at 9:57 am
Posted on 7/9/14 at 10:45 pm to wiltznucs
I would ask to receive a copy of the Summary Plan Description (SPD) which will put the plans rules into "plain" language. You *should* have gotten one when you first became eligible/signed up. Its likely about 20 pages.
At the very least, there will be a section in it describing the types of contributions, and it will likely (unless the company is stupid or has some specific match options) tell you that the match is discretionary.
Most match contribution are set up that way - so that the company can change, even sometimes as of a payroll date (but usually a plan year beginning date - normally January 1 for a lot of plans). But some match types are also fixed as a contribution, but thats bad practice now-a-days since the discretionary allows for the same limits and abilities without being locked in.
There are also some mandatory (each year) match types, but it sounds like the match told to you is way too high for those options.
The sponsor is under no legal obligation to tell you that the discretionary match formula has changed, though it is in good form to do so. One other item - you can have match that is deposited payroll by payroll, quarterly, annually after the fact, etc. Sometimes a match is deposited payroll by payroll and then will be "trued-up" after the year end for whatever else was owed to you.
I would ask HR for a copy of the SPD and your questions - but ask nicely and in a "I'm not sure I understand" way. Asking upset is a good way to get a bunch of legal words that likely won't mean much as an answer.
At the very least, there will be a section in it describing the types of contributions, and it will likely (unless the company is stupid or has some specific match options) tell you that the match is discretionary.
Most match contribution are set up that way - so that the company can change, even sometimes as of a payroll date (but usually a plan year beginning date - normally January 1 for a lot of plans). But some match types are also fixed as a contribution, but thats bad practice now-a-days since the discretionary allows for the same limits and abilities without being locked in.
There are also some mandatory (each year) match types, but it sounds like the match told to you is way too high for those options.
The sponsor is under no legal obligation to tell you that the discretionary match formula has changed, though it is in good form to do so. One other item - you can have match that is deposited payroll by payroll, quarterly, annually after the fact, etc. Sometimes a match is deposited payroll by payroll and then will be "trued-up" after the year end for whatever else was owed to you.
I would ask HR for a copy of the SPD and your questions - but ask nicely and in a "I'm not sure I understand" way. Asking upset is a good way to get a bunch of legal words that likely won't mean much as an answer.
Posted on 7/10/14 at 7:18 am to akimoto
It's likely that it changed in January based on your facts. Like others have said, a call to HR will give you your answers. FYI I administer my company's retirement plan and we revisit our match % each year. We don't necessarily change it but we could.
Posted on 7/10/14 at 7:20 am to wiltznucs
quote:
My experience has been that the average employer match if any in healthcare organizations is less than 4%...
I am fortunate, I work in the pharmaceutical industry and my match is 4% but also the put in an automatic 8%. So for every 4% they put in 12%. Now if my base pay was higher, everything would be sweet.
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