- Jurisdiction
- New York
In January 2023 I was layed off from my job where I've been employed for 8.5 years in an executive sales role. I signed a severance agreement and have started to move on with my career. One month after my final day the company removed $17,000 in employee contributed funds and nearly $3,000 in matching funds from my 401K without telling me.
I called Fidelity and they said they had no idea why the funds were removed but that the employer had removed them.
I emailed the CFO to ask why the funds were removed and an HR person followed up to schedule a zoom call to explain.
On the call they told me that in August a previous HR person who's no longer at the company had uploaded the wrong files or numbers (they couldn't tell me which) to the company 401K platform at Fidelity and because the numbers were off the contributions from August to December 2022 were 2X more than they should have been. So both the employee contribution figure and the matching figure were more than what should have been contributed based on my elected percentage. They described the extra funds as 'gifted' and did not rightfully belong to me. This had happened to everyone who participated in the 401K plan at the company.
They did not say when they caught the error but I'm assuming it was after I was layed off. They said they spoke to Fidelity about the issue and that Fidelity recommended clawing back the funds from employee's 401K accounts and Fidelity executed the clawback transactions.
I told them I had spoken to Fidelity and the people I spoke to had no knowledge of recommending the claw back strategy or executing the transactions. I asked the CFO to put me in touch with the Fidelity representative who recommended the clawback and she said she would set up a call. That was 2 weeks ago.
My primary questions are:
Can a company remove funds from a former employee's 401K even if the funds may have been contributed by mistake of the company and not the employee? Do I have any legal recourse to get these funds back?
Thank you for any advice you can provide. This 401K issue has added even more stress and worry to an already bad situation.
I called Fidelity and they said they had no idea why the funds were removed but that the employer had removed them.
I emailed the CFO to ask why the funds were removed and an HR person followed up to schedule a zoom call to explain.
On the call they told me that in August a previous HR person who's no longer at the company had uploaded the wrong files or numbers (they couldn't tell me which) to the company 401K platform at Fidelity and because the numbers were off the contributions from August to December 2022 were 2X more than they should have been. So both the employee contribution figure and the matching figure were more than what should have been contributed based on my elected percentage. They described the extra funds as 'gifted' and did not rightfully belong to me. This had happened to everyone who participated in the 401K plan at the company.
They did not say when they caught the error but I'm assuming it was after I was layed off. They said they spoke to Fidelity about the issue and that Fidelity recommended clawing back the funds from employee's 401K accounts and Fidelity executed the clawback transactions.
I told them I had spoken to Fidelity and the people I spoke to had no knowledge of recommending the claw back strategy or executing the transactions. I asked the CFO to put me in touch with the Fidelity representative who recommended the clawback and she said she would set up a call. That was 2 weeks ago.
My primary questions are:
Can a company remove funds from a former employee's 401K even if the funds may have been contributed by mistake of the company and not the employee? Do I have any legal recourse to get these funds back?
Thank you for any advice you can provide. This 401K issue has added even more stress and worry to an already bad situation.
