Issue with 401k

[Lvs4885]

I was going through my 401K and noticed that my contributions were all over the place (money amounts they were being deposited each week).
I questioned my employer and they had no clue. So I called the 401K company and asked them why the amounts were not consistent. They had no idea either.
Well come to find out now, my employer notified me that they were contributing the wrong amount, so now they will be auditing my 401K and taking the money back.
We're talking probably close to 20-30K because this has been happening for many years.

I gain 20% interest each year due to my aggressive trading. I spend a good amount of time researching and moving my funds in hopes of one day retiring and not have to struggle.

Has anyone ever heard of this happening?
How can they audit and figure out what they can take back when I have such positive gains?

[Jluke]

hmmm... depending on your age and the year(s) of the contributions you are allowed to contribute only a certain amount, currently that is 18k (or more if age 50 or older).

Depending on the amount contributed, if you were over those amounts then they would actually owe you the money.

If you're talking about the employer match having the errors, then they'll pull back that amount.

strange that it would only be your 401k...

[Petunia 100]

It seems very odd to me. 401k plans are required to do a "true up" at the end of each plan year. Any errors of this sort should be caught then. How this could have gone on for many years without anyone noticing, I just don't know.

[disneysteve]

I was going through my 401K and noticed that my contributions were all over the place

my employer notified me that they were contributing the wrong amount

Are you talking about your contributions or the company's matching funds?

If they over-matched, I don't know how they managed to do that for "many years" with nobody noticing.

[Lvs4885]

It is the employer match and this has been happening for 5 years or so.
I am shocked that they have no system of checks and balances and the fact that they can take it back.

[TexasHusker]

I might hire an IRA attorney on this one. I recommend Warren Baker in Seattle Washington. Warren lives and breathes IRA and 401K law.

This is a sticky wicket and you need to protect yourself.

[HundredK]

It is the employer match and this has been happening for 5 years or so.
I am shocked that they have no system of checks and balances and the fact that they can take it back.

It does really suck to be in this situation, but are you truly surprised they can take it back? It was never yours to begin with.

[disneysteve]

are you truly surprised they can take it back? It was never yours to begin with.

I'm not surprised they can take it back. I do wonder about the logistics. Can they only take back the actual contribution amount? I don't think they should be able to touch the earnings since that wasn't their money.

I also wonder how this happened. When my wife had a 401k, every pay stub listed how much she contributed and how much the employer matched. If there was a discrepancy, I would have noticed it right away. Unless what they actually put into the account didn't match the amount listed on the pay stub. I suppose I probably wouldn't have caught that unless I was cross checking the account against the pay stubs.

[Outdoorsygal]

And if your employer decides to double dip?

Even if they made a mistake, they can just refuse to match your contributions for such and such time. This is a crappy thing to do.

You may want to roll over your 401k to an IRA Or Roth IRA pretty fast. Who knows how much they will take out

I am shocked they have access to your money, I thought all they could do is contribute to it. This feels very illegal.

Had they had asked your permission to get some of the $ back, that would be different. This is just mean and will screw up your retirement planning.
Just my humble opinion

[TexasHusker]

The original post isn't passing the smell test ...

[Outdoorsygal]

I hope you're right

[greenskeeper]

The original post isn't passing the smell test ...

I agree, there are important details missing. I wonder if the OP is even vested in the company match at this point.

[HundredK]

This is just mean and will screw up your retirement planning.

It's not mean at all. I certainly hope the OP's retirement planning didn't bank on amounts that they were never entitled to. If anything, let's assume that the employer takes back just the base amount that they over-contributed - then the OP has had the benefit of what they say is 20% earnings on an additional 20 to 30k for years. That's actually quite a benefit!

[Outdoorsygal]

It's not mean at all. I certainly hope the OP's retirement planning didn't bank on amounts that they were never entitled to. If anything, let's assume that the employer takes back just the base amount that they over-contributed - then the OP has had the benefit of what they say is 20% earnings on an additional 20 to 30k for years. That's actually quite a benefit!

I completely disagree. You assume he knowingly banked on amounts not due him but who in their right mind would ever consider that their employer is over-contributing to their account? then check it out???
As a Teenager, I was a Bank Teller. People deposited money into other accounts BUT NEVER was it allowed for them to take money out of an account that DID NOT BELONG to them. Ever. Period. That money belonged to THAT PERSON. If someone made that mistake to over-deposit, shame on them. It was THEIR MISTAKE and the responsibility is ON THEM.
Thisis very easily resolved by discontinuing the employee matching contributions for a while. End of Story.

Any employer who doesn't notice the money going out for years in the first place is not that worried. It should NOT BE LEGAL to dip into other people's accounts. My assumption is this employee is not vested. He can also just return the money of course, which is likely what I would do considering it was asked of me in a respectful nice way. But for larger employers who clearly don't miss the $$$, these employers who can afford it. So just stopping the matching contributions for a while will do the trick. I guess we'll have to agree to disagree