employer did not pay withheld IRA

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#1
juro  
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What can be done if an employer did not pay IRA withholdings into an employee's Simple IRA plan?
 

#2
sjrcpa  
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Complain to the state labor commission.
Sue them for theft.
EDIT: Report to IRS.
 

#3
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As well as state labor commission, I would observe that the US Department of Labor has very strict rules about this. For SIMPLE contributions withheld from an employee's pay, they are supposed to be deposited as soon as they can reasonably be segregated. When I looked at this some years ago, there was a policy that allowed deposits of employee contributions to be made no later than thirty days after the calendar month in which the deduction was made.

There is no similar rule for employer contributions but doing it quarterly, if not monthly, is a good habit to get into.
 

#4
juro  
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...
 

#5
juro  
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Missing $2,886.34 in contributions that I had withheld from my paycheck.
Also missing the Company Contributions for total of $425.21.
I just made a spreadsheet
https://i.imgur.com/fGjKT9e.jpg
 

#6
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They're basically missing two months - January and March this year, as far as I can see - and the payment for the last month. The latter is now late if it wasn't received by the custodian by last Friday. Without knowing your salary (please don't...) and the contribution percentage, it is impossible to know whether the employer contribution is correct.

Does the custodian's account show weekly payments for employee contributions or monthly?

It's a lot of money and it should have been paid over by now. However, this is not unusual for smaller businesses. The first stop should always be the (ex?) employer. If that does not bear fruit, especially with regard to employee contributions, you should consider the consequences of reporting them to state and federal labor departments. It's easy to say that you should do that, but you will have to consider things like getting a reference from them in future.

Good luck sorting this.
 

#7
juro  
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Thanks, hope my spreadsheet makes sense at least.
The woman in charge of this drove me crazy, a big part of why I left the place.

The contribution percentage ranges from 15% to 11%, i don't get it, should be a fixed rate?
Does the custodian's account show weekly payments for employee contributions or monthly?
monthly i think. Its all on the spreadsheet
 

#8
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The default employer contribution is 3% of wages, capped at the amount the employee contributes. So if your wages fluctuate, the employer dollars contributed will fluctuate, unless the employee contributes an amount that comes out to 3% or less of wages.

Employer might also fund every employee, whether they contribute or not, at 2% and there are rules that allow a smaller contribution than 3% in two years out of five. Don't know much about it as I have never actually had one of those.
 

#9
juro  
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#10
juro  
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Spoke to the Investment Advisor Representative. He says i am right about the missing final weeks,
but as for the other missing contributions, he says that is a "function of payroll" and that his office is
acting only as a "conduit."
Last edited by juro on 10-Jan-2023 12:36pm, edited 2 times in total.
 

#11
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Well, the investment advisor representative is correct. Your former employer needs a good boot up the proverbial. I have seen this with a couple of small employers. In one case, my boss took the client aside and told him the facts of life. We started monitoring the employee deductions each quarter and computed the employer match at the same time. the other client (wife of majority shareholder) was convinced she knew what she was doing until the custodian said they could not accept late contributions. That was when husband fired wife, employed a proper office manager and engaged us to oversee the process.

Point is that this could just be a complete mess, rather than anything intentional. Are you still in touch with anyone else there and can you initiate a conversation with them about SIMPLE contributions?
 

#12
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sjrcpa wrote:Complain to the state labor commission.
Sue them for theft.
EDIT: Report to IRS.


Based on the rest of the facts, this is a good recommendation. But it's dangerous to jump that quickly before the facts are fleshed out (and again, they were later in this thread).

I bring this up because one my former employees was in the process of reporting me to the DOL and IRS for the same thing. She had been spurred on by her financial advisor. Ironically, one of the other advisors in the office alerted me because he was in disbelief. In my case I remitted the employee contributions within 1 - 3 business days all year. I made the matching contribution in January. For whatever reason this idiot advisor convinced my idiot employee that I was sending in a bi-weekly match but not her own deferral. She had somehow convinced herself, and him, that she was deferring much more and so that must be the match. I supplied the deferral election, along with her paystubs, and the issue went away.

I called the advisor and chewed him a new one. I'm not sure I've ever threatened to sue someone before or since, but I was very heated and told him he was a reckless danger to his profession and should probably consider selling used cars (no offense to any used car salesmen).

I fired her a few months later for something else, but this was the beginning of the end.
 

#13
juro  
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SumwunLost wrote:
Point is that this could just be a complete mess, rather than anything intentional. Are you still in touch with anyone else there and can you initiate a conversation with them about SIMPLE contributions?



No responses yet to my email. She was ignoring my requests for months when I was still there, so I never got to reconcile the company IRA liability & payments to the stmts from the custodian. Probably due to the boss telling her to ignore me. Once I sent my request for stmts direct to the custodian, but I never got anything.

But I could see all the money getting paid to the custodian thru auto-pay every month. How can this happen?
 

#14
sjrcpa  
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juro wrote:I could see all the money getting paid to the custodian thru auto-pay every month

Then where did it go once it got there? Obviously not to your account.
 

#15
juro  
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sjrcpa wrote:
juro wrote:I could see all the money getting paid to the custodian thru auto-pay every month

Then where did it go once it got there? Obviously not to your account.



Who allocates the funds to employee IRA accounts? I never saw how it was done, I assumed (makes an ass out of u & me) that the custodian did it. But it really is a mess, & knowing my former co-worker, I should have known better.
 

#16
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Usually, there is a form - online or paper - that tells the custodian how to allocate the payment. I have never known a custodian to allocate without being told by the employer. How would they know? They'd need full payroll records to do it.
 

#17
juro  
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The custodian emailed me, seems he is talking down to me, I am getting worried.

Hi Juro,
I did forward your last email to Anna at S........so she can use it for reference
Your spreadsheet isn’t actual proof that any contribution are missing. You will need copies of paystubs.
If there are missing contributions, you need to reconcile the shortages with your previous employer using your payroll statements or paystubs.
Have you tried to contact Anna yet? Let me know.
Thank you,
Paul
 

#18
sjrcpa  
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I wouldn't say talking down.
Basically saying "we don't know, contact the employer"
 

#19
juro  
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Complain to the state labor commission.



this seems to be the only place to file a complaint.

https://www.michigan.gov/leo/bureaus-agencies/ber/wage-and-hour/complaint
 

#20
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It’s not the only place. The US Department of Labor also has jurisdiction. Whether they will consider a relatively small amount as priority is another matter.
 

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