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401k Deductions Returned?
Posted on 11/26/14 at 10:51 am
Posted on 11/26/14 at 10:51 am
I have emailed HR about this but the guy who deals with this is out of the office. Trying to figure out if there is a reasonably explanation/how screwed with the IRS I am
I started with a company in the past few months. On my most recent salary statement, I noticed that my 401k deductions have been "returned" and taxed then my employer match eliminated. My YTD 401k deductions were put into my paycheck and taxed. No idea what happened with employer matching.
According to my 401k accounts for this company, I still have all that cash money in my accounts.
What is going on?
I started with a company in the past few months. On my most recent salary statement, I noticed that my 401k deductions have been "returned" and taxed then my employer match eliminated. My YTD 401k deductions were put into my paycheck and taxed. No idea what happened with employer matching.
According to my 401k accounts for this company, I still have all that cash money in my accounts.
What is going on?
2
Posted on 11/26/14 at 10:57 am to GenesChin
If your 401(k) deductions happened in the same tax year as you had the money returned, you're probably okay with the IRS. That's the question you need to ask your employer and also, did the company withhold FIT and SIT on the returned amounts.
I had this happen to me one year when all "highly compensated" employees had to have part of their 401k contributions returned and it was no big deal because it all happened in the same tax year and my employer withheld taxes on the returned amount.
I just opened an after-tax IRA with the refunded amount since in my mind that money was already gone anyway.
ETA: I'm not saying the reason your contributions were refunded to you were the same as when it happened to me. In your case, it's possible the company's plan has some compliance issues and the company was forced to return everyone's money.
Do you know if everyone had their money returned or just a select few?
Are you new to the company? If so, maybe somebody got your plan eligibility date screwed up and started your 401k contributions before you were eligible to join the plan. Please come back and let us know what the reason was after you talk to your HR guy. Thanks.
I had this happen to me one year when all "highly compensated" employees had to have part of their 401k contributions returned and it was no big deal because it all happened in the same tax year and my employer withheld taxes on the returned amount.
I just opened an after-tax IRA with the refunded amount since in my mind that money was already gone anyway.
ETA: I'm not saying the reason your contributions were refunded to you were the same as when it happened to me. In your case, it's possible the company's plan has some compliance issues and the company was forced to return everyone's money.
Do you know if everyone had their money returned or just a select few?
Are you new to the company? If so, maybe somebody got your plan eligibility date screwed up and started your 401k contributions before you were eligible to join the plan. Please come back and let us know what the reason was after you talk to your HR guy. Thanks.
This post was edited on 11/26/14 at 11:04 am
Posted on 11/26/14 at 12:44 pm to LSURussian
The HCE rules you mention probably wouldn't hit him until next year, if applicable, since the test is backward looking. And he has only been with the company for a few months so it is unlikely he has exceeded that threshold already this year.
Sounds more like a systemic problem to me, especially considering the deductions appear to be both on his paycheck and in his retirement account.
Also curious to hear HR's explanation.
Sounds more like a systemic problem to me, especially considering the deductions appear to be both on his paycheck and in his retirement account.
Also curious to hear HR's explanation.
Posted on 11/26/14 at 12:45 pm to LSURussian
quote:
Are you new to the company? If so, maybe somebody got your plan eligibility date screwed up and started your 401k contributions before you were eligible to join the plan.
Could also be this.
Posted on 11/26/14 at 12:53 pm to Dusty Bottoms
quote:I see that now. I missed it when I first read his post. Probably an eligibility issue if I had to guess.
And he has only been with the company for a few months
Posted on 11/26/14 at 2:05 pm to GenesChin
You should not have any issues with the IRS, except, that if the company didn't withhold tax on the refunded amounts, it will mean you will get a smaller refund / owe more money in April.
My guess is that money won't be in your 401K account for long!
Probably an eligibility issue, but, I'm stunned noone contacted you ahead of time. That's a pretty big issue for them to not explain.
My guess is that money won't be in your 401K account for long!
Probably an eligibility issue, but, I'm stunned noone contacted you ahead of time. That's a pretty big issue for them to not explain.
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