How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Phillips Esq. Your Own Question

Phillips Esq.
Phillips Esq., Financial Analyst and Licensed Attorney
Category: Finance
Satisfied Customers: 12844
Experience:  B.A.; M.B.A.; J.D.
Type Your Finance Question Here...
Phillips Esq. is online now
A new question is answered every 9 seconds

the company i work for has a 401k plan which i pay into about

Resolved Question:

the company i work for has a 401k plan which i pay into about a year ago one of the partners left the business and the other partner changed the name neither one closed the 401k account and continued taking tax deffered money out of the account and paying it into my 401k i got a call today from the partner who left telling me he has bad news 4 me that my investment money 4 the year will have to be paid back to me and not only will i have to pay taxes on that money but ill be responsible to the irs for any late charges is this legal
Submitted: 1 year ago.
Category: Finance
Expert:  Megan C replied 1 year ago.
I'm having a little difficulty understanding the situation. Please confirm the following items

1) You have a 401K plan at work

2) You contribute to the 401K Plan at work

3) Your company also contributes funds to your 401K plan

What happened with the funds? Did they not make a contribution to the plan?

Please give more detail.

Thanks
Customer: replied 1 year ago.

i have a 401k plan at work


I don't know if they have sent in any matches


 


 

Customer: replied 1 year ago.

i have a 401k plan at work, no they don't contribute money right now.

Expert:  Megan C replied 1 year ago.
Did you take any money out of the account? Why is your employer saying that you will owe taxes and late fees?
Customer: replied 1 year ago.

The firm changed ownership and the new owner a prior partner of the other firm, continued to send in my contribution for almost two years. NOw that the prior ower is trying to close out the 401K, the 401K company is saying that they have to refund my money, take out the taxes, adjust all my gains and/or losses for almost two years, and which of course I will have to pay payroll taxes on as well any penalties and refiling fees and/or accountant fees

Expert:  Megan C replied 1 year ago.
Thank you for your question, and your clarification.

If they are closing your 401(k) plan, yes they will have to give you your funds, but you can have them deposited into an IRA and then you won't owe tax on the transfer. You have 60 days from the date that they issue you your payment to make this decision. If you want to keep a retirement account, then this would be the way to go. You would not owe taxes currently, and the funds would still be set aside for your retirement.

You can read more about this, HERE.

Please let me know if you need anything additional. Thanks again for using JustAnswer.com and have a happy, and safe, 2013.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Customer: replied 1 year ago.

I don't think you fully understood the situation. I am sorry, as my husband started telling you about the issue. The issue is NOT rolling over the money because the account is being closed. We are aware that once the account is closed, I will have to do something like rolling the money over, or simply take it and pay taxes and penalties, which I am not going to do.


 


Instead, the issue is the fact that I have been contributing on a weekly basis $150 per week to my 401K. A separate check is issued by my payroll department made payable to the 401K company. That check is then mailed to them. The problem that has now come to light is that the 401K company is saying that they never should have accepted the contributions, which comprise about 104 weeks worth from the 'new' company since the 401K plan was set up years ago under the 'old' company name... so now I not only lose the opportunity to have otherwise invested my money, but I am told I will be refunded all contributions, adjustments will be made for any losses or gains (I suppose pro rata per weekly contribution) and then I of course will have to pay payroll taxes since the money will be refunded to my former boss who will then have the payroll company issue me a check once they made payroll deductions. I will then get an amended W2 for 2011 which causes me to have to re-file my tax returns for that year, causes me to hire an accountant, again, and possibly be faced with penalties. I am fairly outraged that my employer can get away with this for his lack of responsibility by properly closing out the 401K in early 2011. Please advise.

Expert:  Megan C replied 1 year ago.
I'm going to opt out of this, because this is a legal question, not a financial question. I am going to send this message to a moderator, and they will need to move your discussion to the legal department. There may be a delay in responses, but rest assured someone will assist you with your question.
Customer: replied 1 year ago.

am i suppose to wait for a reply from someone else now

Customer: replied 1 year ago.

obviously you were very nice but my question wasnt answered

Expert:  Phillips Esq. replied 1 year ago.

Your previous Expert has referred your case to me to take a look to see if I can help:

Instead, the issue is the fact that I have been contributing on a weekly basis $150 per week to my 401K. A separate check is issued by my payroll department made payable to the 401K company. That check is then mailed to them. The problem that has now come to light is that the 401K company is saying that they never should have accepted the contributions, which comprise about 104 weeks worth from the 'new' company since the 401K plan was set up years ago under the 'old' company name... so now I not only lose the opportunity to have otherwise invested my money, but I am told I will be refunded all contributions, adjustments will be made for any losses or gains (I suppose pro rata per weekly contribution) and then I of course will have to pay payroll taxes since the money will be refunded to my former boss who will then have the payroll company issue me a check once they made payroll deductions. I will then get an amended W2 for 2011 which causes me to have to re-file my tax returns for that year, causes me to hire an accountant, again, and possibly be faced with penalties. I am fairly outraged that my employer can get away with this for his lack of responsibility by properly closing out the 401K in early 2011. Please advise.

Response: Unfortunately and regrettably, the employer can legally do this eventhough it is quite unfair and not equitable. However, if you incur any penalties as a result, you can work with an IRS tax advocate to lessen or eliminate the penalties because of the circumstances surrounding the taxing event. Since the employer responsible for this has changed ownership, there is no one to go after to reimburse you for any penalties/taxes levied against you by the IRS or any taxing authority because of the employer's mistake.

Customer: replied 1 year ago.

That is an amazing response, for certain. I understand what you are saying, but I am not only potentially facing penalties through no fault of my own, but I have lost the opportunity to make an investment elsewhere.... I am at a loss as to understand how an employer cannot be held accountable at least for my losses. He failed to provide me with a correct W2 and issued a separate check from my paycheck for almost two years. This blows my mind....

Expert:  Phillips Esq. replied 1 year ago.
That is an amazing response, for certain. I understand what you are saying, but I am not only potentially facing penalties through no fault of my own, but I have lost the opportunity to make an investment elsewhere.... I am at a loss as to understand how an employer cannot be held accountable at least for my losses. He failed to provide me with a correct W2 and issued a separate check from my paycheck for almost two years. This blows my mind....


Response
: Hello, I quite I understand your frustrations. However, my understanding is that the employer who did this no longer exists. If this is not correct, kindly let me know. My response was based on the premise that the employer responsible for your headache and lost earnings is no longer in existence.

I await your response.
Customer: replied 1 year ago.

Somehow, I just wrote a response that does not appear. But, both employers are around, in fact. I work for the second of the two. Employer A, I worked with a long time. He became partners with who was an employee = B. They created company called A&B, P.A. Then A kind of retires, retreats from office, and B ultimately creates a compamy using the same name, but a fictitious name: B dba A&B. B then forms an LLC. I therefore, throughout the past few years, first getting paychecks under A company, then A&B, PA, then A&B, and now B LLC. So, the employers are around, and companies all appear on Div of Corp as active corporations. Problem is that the contract with 401K compamy was with Company A, yet they collected my contribution for almost two years, despite the various name changes on the payroll checks. So, they are around, but effectively in business? Only B LLC - who I am now employed by, who took over the business, and who disbursed my contributions to 401K Co. I don't know how to answer that otherwise. Employer A hired Employer B to maintain A's clients/customers. All I know, is I started contributing to the same 401K since the mid-90's and never once have I been told this was an issue, when the firm names started changing. Employer B LLC continued to send in my contributions. 401K company always sent a receipt of acknowledgement and allocation of investment. I hope this helps understand better, though may not change your response, though I hope there is something there. I have known these people a long time, and at best, XXXXX XXXXX do right by me simply because this type of financial burden is not something I am prepared for, not to mention the loss of investment opportunity in the alternative. The truth is, I also believe they are taking advantage of me by making me feel I have no recourses because of their own lazy inaction and irresponsible actions. Rather than wrap up business when Emp A should have, he instead took off from for a several month vacation, and now is telling me I am up that 'crappy' creek without a paddle.

Expert:  Phillips Esq. replied 1 year ago.

Thank you for you for the detailed explanation:


Somehow, I just wrote a response that does not appear. But, both employers are around, in fact. I work for the second of the two. Employer A, I worked with a long time. He became partners with who was an employee = B. They created company called A&B, P.A. Then A kind of retires, retreats from office, and B ultimately creates a compamy using the same name, but a fictitious name: B dba A&B. B then forms an LLC. I therefore, throughout the past few years, first getting paychecks under A company, then A&B, PA, then A&B, and now B LLC. So, the employers are around, and companies all appear on Div of Corp as active corporations. Problem is that the contract with 401K compamy was with Company A, yet they collected my contribution for almost two years, despite the various name changes on the payroll checks. So, they are around, but effectively in business? Only B LLC - who I am now employed by, who took over the business, and who disbursed my contributions to 401K Co. I don't know how to answer that otherwise. Employer A hired Employer B to maintain A's clients/customers. All I know, is I started contributing to the same 401K since the mid-90's and never once have I been told this was an issue, when the firm names started changing. Employer B LLC continued to send in my contributions. 401K company always sent a receipt of acknowledgement and allocation of investment. I hope this helps understand better, though may not change your response, though I hope there is something there. I have known these people a long time, and at best, XXXXX XXXXX do right by me simply because this type of financial burden is not something I am prepared for, not to mention the loss of investment opportunity in the alternative. The truth is, I also believe they are taking advantage of me by making me feel I have no recourses because of their own lazy inaction and irresponsible actions. Rather than wrap up business when Emp A should have, he instead took off from for a several month vacation, and now is telling me I am up that 'crappy' creek without a paddle.



I am sorry that your previous post was lost. It happens to me several times a day on this. The site is a little buggy.




Response
: Yes, your explanation does change my response a little. While you are ultimately responsible for any penalties and taxes, you can indeed ask the employer who was directly sending your contributions to the 401k company for reimbursement of your penalties and taxes. I am not optimistic however about asking the company for reimbursement of your lost earnings from the returned contributions. That one may be just too steep a hill for you to climb.



Let me know if you need further clarification.

Phillips Esq., Financial Analyst and Licensed Attorney
Category: Finance
Satisfied Customers: 12844
Experience: B.A.; M.B.A.; J.D.
Phillips Esq. and 5 other Finance Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Rakhi Vasavada

    Financial and Legal Consultant

    Satisfied Customers:

    2073
    Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
< Last | Next >
  • http://ww2.justanswer.com/uploads/RA/rakhi.v/2012-7-3_14374_RakhiVasavadaL.64x64.jpeg Rakhi Vasavada's Avatar

    Rakhi Vasavada

    Financial and Legal Consultant

    Satisfied Customers:

    2073
    Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
  • http://ww2.justanswer.com/uploads/BU/BusinessTutor/2012-2-2_115741_Kouki2.64x64.jpg Manal Elkhoshkhany's Avatar

    Manal Elkhoshkhany

    Tutor

    Satisfied Customers:

    1890
    More than 5000 online tutoring sessions.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    1755
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JK/jkcpa/2011-1-16_182614_jkcpa.64x64.jpg JKCPA's Avatar

    JKCPA

    CPA

    Satisfied Customers:

    838
    Bachelors degree and CPA with Accounting experience.
  • http://ww2.justanswer.com/uploads/starside8/2010-2-16_55433_DSCN1175.JPG Eric's Avatar

    Eric

    Financial Manager

    Satisfied Customers:

    558
    Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.
  • http://ww2.justanswer.com/uploads/FA/fastfile/2011-12-15_23139_Klein2011small.64x64.jpg R. Klein, EA's Avatar

    R. Klein, EA

    Accountant

    Satisfied Customers:

    397
    Intuit Ask a Tax Expert. QuickBooks Certified Pro Advisor (all editions)
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    324
    NASD Licensed Rep, 1997-2001, Business Attorney