Hello. Thank you for submitting your question and allowing me to assist you.
This is a very good question.
First, it is possible that your employer did not realize the error either so it may be a situation in which they didn't know about the change to notify you. Should they have checked? Yes.
My employer did set it back to zero when they realized I should not have not terminated and thus the 401k account manager notified
I am not sure I understand. Did the employer agree to contribute 2.5% for each employee?
If the employer agreed to pay all similarly situated employees a 2.5% match and you qualified and if the employer paid other employees then it should pay you.
They knew they made a mistake by telling JPmorgan I was no longer an employee but caught it before paperwork could be sent out about roll over information. They set the contribuation amount to zero from six. Yes, they contribute 2.5% if you contribute 5%. I have been an employee for 15 years and have always contributed and recieved the matching amount like everyother employee.
The right of contribution would be in the plan documents. If you made your contributions then you would be entitled to the match. This would likely fall under the ERISA laws on plan contributions.
My employer may say there was nothing to "match" since I was not contibuting....although of course I thought I was all along.
I made contributions up until the last year when they change my election from 6 to zero. I also thought JPM should have sent me a letter at that time as well
I see. Unfortunately, since you did not make a contribution then there may be a problem. Although it was their error that initiated the problem the fact that you did not keep up with the contributions and check your statement cuts against you legally. I would still argue with them that if the error had not been made then you would not have had a problem. I take it you did not know about the error for some time?
I just realized the error a year later. I would have no reason to check my contributions since I should be the only one allowed to change them. Since I had been putting in 6% for 14 years, why would I think to check? The reason I didnt notice the roughly 120 difference in my paycheck was due to changing the amounts I put in my HSA everymonth. The "error" has to be some violation of privacy I would think...
I do not think that it is a privacy violation. Generally the laws on privacy only apply to the improper disclosure of information. It may be a technical violation of the 401K rules/laws. These are found in the Employee Retired Income Security Act and also in your plan documents -- ie the information given to you about the 401K plan and how it works. You also need to check with the 401K holder. The issue is that your employer changed the withholding without your consent. That was there error and you should argue that they did not have the legal authority to change the withholding so they should be liable for the error. Another issue you will have is that the contributions may not be able to be made retroactively. The IRS code prohibits contributions for a plan year once the tax returns have been filed. If you have not filed your return and plan to do so by October 15th for 2009 then you should immediately make the 401K contributions. It is possible that your contributions for 2009 and 2010 will still be within the contribution limits that you are permitted for a one year period. If that is the case and you have already filed your tax return then you would need to make the maximum contributions that you could for 2010. I strongly recommend that you speak to a CPA about the tax implications of contributing. You must be concerned with the lost match but also with the tax issues.
You should also look at the language on the withholding authorization. It may state that only you can authorize the change.
Do you have any additional questions that I can address?
Please let me know if you have an additional quesiton.
Ok, I will do that. I still have 25 plus years to retirement. As soon as I realized the error I changed the contribution from zero to 10% to make up some ground on my end, but I realize this will not help me for our 2010 taxes as far as what my income will show. Should I request my employer just pay me for the matching if they are not able to put it back in my 401?
I think that you have a strong argument that you are entitled to be compensated for the 2.5% that was not put into the account. However, you will need to make the required match because under the terms of the 401K agreement, that is your responsibility. I would first push to get that corrected. You can ask for the 2.5% to be paid to you but the employer does not have an obligation to pay it -- the employer's obligation ONLY arises if you make the matching contributions. I am not saying that you should not ask but only that if you were to take this to court and you won, your remedy would most likely be that you contribute and they match. I hope this informaton has been helpful.
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Best of luck. I hope that your employer will do the right thing without further delay and compensate you for their error.
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