How common is this?
How can you try to correct it if it occurs?
Provided by Benjamin Bogetto
Your
latest retirement plan account statement arrives in your email inbox. You take
a look at it – and something seems amiss. “That can’t be right,” you say to
yourself. There must be some kind of mistake. Who should you talk to about
this? Who can fix it?
Mistakes do happen with
retirement plans. As a
consultant to these programs told the trade journal PLANSPONSOR, they are “ubiquitous.” In fact, they are so prevalent
that the Internal Revenue Service devotes more than 20 web pages to helping
employers fix them over at irs.gov.1,2
A
small business has much on its collective mind, and sometimes its retirement
savings program may get short shrift. Errors may occur regarding ongoing salary
deferral amounts, plan participant loans, or company matches when an employee’s
pay is boosted by tips or bonuses. In the case of traditional pension plans, an
employer may even pay the retired worker too much.
How can you detect
mistakes? Look at
your paystubs consistently to make sure your account balance reflects your
contributions. This will not be a direct relationship because of compound
interest and yield over the years, but if something is really off, it should be
evident. If you happen to have taken a loan from your plan, check to see that
the balance reflects this. If you have changed your investment mix or the
percentage of salary you defer into the plan per paycheck, examine your account
statements over the next several months or year to confirm that these changes
are carried out.
How can you
try to fix these errors? You should turn to the plan sponsor (your employer) first. Approach your employer’s human
resources department according to procedure. Read the rules for addressing such
mistakes within the summary plan description (the booklet about the plan that
you should have received at or shortly after your enrollment) and bring your account
statements with you. Your employer will want to know about any potential
mistake, because if it is not corrected, it could mean trouble with the IRS.1,3
About 40% of all workplace retirement
plans in America are sponsored by companies with less than 10 employees. In
such cases, your human resources contact may, effectively, be your boss. How
should you bring up such a delicate matter to him or her?3
One, meet with your boss privately and be
very polite. Maintain a pleasant attitude. Avoid appearing disgruntled. The
conversation could awaken your boss to the need for better administration,
better supervision of the plan.
If the answers you get at work don’t seem
adequate, then contact the plan provider (the investment firm that furnishes
the plan for your employer). You could also ask the financial professional who
consults you to look into the matter on your behalf.
If you have retired after participating in
a pension plan and you wish to challenge what you feel is a mistake, you may
want to contact the Pension Rights Center at 888-420-6550 or via its website, pensionhelp.org.4
This material was prepared by MarketingPro, Inc., and does not
necessarily represent the views of the presenting party, nor their affiliates. This
information has been derived from sources believed to be accurate. Please note
- investing involves risk, and past performance is no guarantee of future results.
The publisher is not engaged in rendering legal, accounting or other
professional services. If assistance is needed, the reader is advised to engage
the services of a competent professional. This information should not be
construed as investment, tax or legal advice and may not be relied on for the
purpose of avoiding any Federal tax penalty. This is neither a solicitation nor
recommendation to purchase or sell any investment or insurance product or
service, and should not be relied upon as such. All indices are unmanaged and
are not illustrative of any particular investment.
Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is not affiliated with First Heartland Capital, Inc.
Bogetto & Associates does not provide legal or tax advice. These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.
Citations.
1 - plansponsor.com/Plan-Sponsors-Should-Be-Aware-of-Common-Errors/
[6/1/15]
2 - irs.gov/retirement-plans/plan-sponsor/fixing-common-plan-mistakes
[9/15/16]
3 -
thefiscaltimes.com/Articles/2014/01/08/How-Convince-Your-Employer-Fix-Your-401k
[1/8/14]
4 - marketwatch.com/story/what-happens-when-theres-a-mistake-in-your-401k-2016-10-24
[10/24/16]
Financial Health...For Now & Tomorrow
Contact us Today
Website - www.bogettoandassociates.com
Telephone - 314-858-1602
Email - peter@bogettoandassociates.com
10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127
Website - www.bogettoandassociates.com
Telephone - 314-858-1602
Email - peter@bogettoandassociates.com
10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127
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