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Email ThisMy work forgot/never set up my 403b account. I turned in my paper work 4 months ago. They have not been taking out 5% of my paycheck like I designated. My HR director, never admits a mistake, and has NOT given me details of how the organization plans to move forward! She mentioned a “retroactive” plan - but it’s been more than 3 weeks and I have not heard any details. They also asked that I make bigger contributions in the future to catch up - but no further details. I haven’t been sent any forms to fill out or anything. I am scrupulously keeping a paper trail and will be persistent with my questions.
What would be a fair “retroactive” plan?
I can’t really make a bigger contribution …..and they keep stalling!
Anyone run across a problem like this? What to do? How can I keep pressure on them to fix this?
First, let me say that I am still learning the ins and outs of retirement plans myself and I am by no means an expert in this area.
Let’s break this down into two areas.
1. HR’s Response (or lack there of)
It’s been 4 months. That means you’ve probably had at least 8 paychecks from the time you turned in the paperwork until now. If you were pestering them after every paycheck I’m not sure how this has continued for 4 months. My guess is that you were probably waiting for it to work out and haven’t been pestering them.
It’s time to take action. You need to find out who has your paperwork (if anyone) and where it needs to go. It’s easy to blame HR, but HR may not be solely at fault. For example, in my organization the 403b paperwork goes to me. I sign off on it and then give it to Finance. Finance does payroll and arranges for the deductions to be sent to the appropriate company. Find out who specifically has been holding up your paperwork and go directly to their supervisor.
2. Retroactive Payments
As a far as what’s “fair” as a retroactive payment, the only “fair” thing is for the same amount to go in. Don’t expect any special payment from the company for your pain and suffering. I find it interesting that the company brought up retroactive payments since this would be quite the administrative undertaking. 403(b) contributions are pretax. Since they have not been taking out the deductions you have already paid taxes on these wages. While it’s possible to go back and retroactively fix it all, I doubt they’re going to want to nor will you really want that hassle.
Which is why they mentioned that you should contribute a higher percentage. Funny though because you’d have to be contributing anything in order to contribute a higher percentage. This is probably going to be your best option once everything is straightened out. While you admittedly don’t have enough to make up for the 4 months now, try putting in 6%-7% and at some point things will even out.
In Summary:
Take action now. Let them know you’re serious and give them this next paycheck to fix it. If they don’t then go over their heads. There is no good reason for the delay. Also, try to focus on the positive–putting that money in now you’re probably buying lower than you would have in the past 4 months!
I’m interested in any advice you may have…
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It seems the only realistic thing to do is to get it set up, and move forward. Trying to adjust pre-tax earnings retroactivly sounds like a nightmare, and given the fact that they can’t get simple paperwork correct, I’m not sure I’d want them doing something with the IRS.
Now, if there was some sort of employee match, I’d ask for that. And if you’re really hot to get that money in a retirement account, open a personal IRA.
I agree with Norcross. And it sounds like you’re doing what you need to - keeping a paper trail and persistently following up.
Good luck!
@Norcross - You make a good point. At the OP’s age he’s probably better off putting the money into a Roth IRA.