401k being deducted out of a paycheck but not going into 401k account

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lawquestions111

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Ohio
I have a family member where the company they work for has a 401k plan with a percentage match. As it turns out there check has been deducted from every other week (they get paid bi-weekly) but the amount that is suppose to be going into a 401k hasn't been going into the 401k account since the end of 2019 or 2020. When this family has asked the company about whats going on. First the company they work for said for the first 7 months the money was going into there adp 401k account, and there was a error. Finally the asking months later after the company said there was a adp error this same company said it was going into a escrow.

This same family member has asked if they can manage the escrow and how much is in there. The company always says we will get back to you. This family member has brought it to the attention of the managers and the owners, and still nothing has been done. Does anyone have any thoughts on this?
 
that is crazy ADP although does have a history of mismanaging things and I can not imagine why they don't have a reputable company administering their 401k. I would call ADP and ask what account the money is going into and they should give you an account number. Otherwise you hopefully have the pay stubs and can calculate what that should be.
 
No, this is not proper. The moneys need to be put into the appropriate accounts based on the plan document. You can't "escrow" them (at least not more than the middle of the next month) nor do you get to deposit them in some other 401(k) plan. This is going to be a mess. The department of labor has policies to correct the failure to make contributions.

They might get need to file a complaint with the department of labor.
 
December 2020 was the last time anything was put into the ADP 401k.

January 2021 the company switched over to a new payroll company which is no longer ADP, but they can still login to there ADP retirement account, shows no deposits.

My family member called ADP and they said the double checked everything and shows everything is correct and no deposits have been made since December 2020. ADP put them on hold and turns out nothing else is going through.

My family member also called the new payroll company and the new payroll company told him the have to try a website that works with there payroll company if that didn't work then to talk to the company hr. which leads back to the escrow.
 
They "payroll" company shouldn't have anything to do with it. While the company is free to use whoever they like for payroll and don't need to tell the employees, the 401(k) plan is set forth in documents that must be provided to the employees and can't just be changed on a whim.

Again, escrow is not permitted. If they terminated an old plan in favor of a new, they still have to make the deposits (not later than the 15th of the month after they're withheld from the employee pay). HR is blowing smoke. File a complaint with the DOL.
 
flyingron said:
They "payroll" company shouldn't have anything to do with it. While the company is free to use whoever they like for payroll and don't need to tell the employees, the 401(k) plan is set forth in documents that must be provided to the employees and can't just be changed on a whim.

Again, escrow is not permitted. If they terminated an old plan in favor of a new, they still have to make the deposits (not later than the 15th of the month after they're withheld from the employee pay). HR is blowing smoke. File a complaint with the DOL.
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sorry I did read this before, and didn't comment. Thank you this is very helpful.

As of what I was told by family the 401k was changed on a whim from what it sounds like plus my family member has a email or some type of a message telling them the money has been going to into a escrow for about a year in one message. (I understand the escrow is not legal, and they will be reaching out to the DOL.) thanks again.
 
cbg said:
They need to call the DOL yesterday. This is the sort of thing company executives go to jail for.
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Is that really true about them going to jail? Is this sort of thing where the company will probably get hit with fines or other penalty's?

I believe I found more info here - 401(k) Plan Fix-It Guide - You haven't timely deposited employee elective deferrals | Internal Revenue Service and here 401(k) Deposit Rules for Employers | Late 401(k) Contributions & More (the patriot site sort of dumbs it down for people like me.) Thanks again for everyones help this really has pointed me in the right direction to help my family member. I never even knew there was anything such as a dol till today. This is a fantastic site.
 
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Fines are a certainty. Jail is a maybe depending on what the DOL finds in their investigation. But a former employer of mine once got hit with fines for ONE late deposit; we were out of compliance by a matter of days, not months and the reason we were late was due to a cascade of events involving more than one key person being out due to unforseen medical emergencies. If we got fined, no question that your family member's employer will be after being out of compliance for over a year.
 

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