My husband makes a bi-weekly contribution to his employer sponsored 401(k). Upon investigation, I found that the money taken out was not contributed for several months into his 401(k). When my husband questioned his employer, he was told that they had to borrow from the 401 (k) to pay everyone. They have put the money back, but of course we lost interest on that money. Is this legal? What would you do?? HELP Please!!!

That can't be legal! What kind of company does he work for? I would contact a lawyer about it, and in the mean while have him look for another job, this company is definately going to go under.

It is a family owned heating and air company. He has worked there for 10 years and I have begged him to move on. They have not always been fair to their employees but this really crossed the line. I am concerned because what if I would not have caught it? Would they have but it back? and would they do it again?? We are getting ready to close on a new home next week and we just do not have money for an attorney. I also realize if we pursue this we may but them out of business which means a lot of people will be unemployeed

I would let the other employees know about this deception first, and I would definately have him looking for another job. If they are having to borrow other peoples money to pay their employees then I would think that alot of people are going to be unemployed soon anyway. As far as an atty goes I dont know how far you would get with that anyway since they obviously dont have money to pay their employees what would you get from them, you file something against them and then they will probably have to file bankruptcy. I would think that there should be something that you could do as far as filing charges against them or something, it is basically theft right? Well good luck and I hope that your husband can find a different job.

This actually happened last year, but I found the proof when I was filing our taxes and started looking closely at the numbers. As far as not getting anything from them, lets just say they own a lot of very nice personal things! However, we are not gold diggers, we just want what rightfully belongs to us. My husband has worked very hard for them. Yes, I think it is theft also! Also my husband has told the other employees and they are upset, but feel that there is nothing they can do.

I would have your dh find another job...These people are untrustworthy!! If I was in your shoes, I wouldn't even believe their explanation on why they took the money! I would go thru your papers and see if these people borrowed money before

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Angels may not come when you call them, but they'll always be there when you need them.

Angel38, believe me I am using a fine tooth comb to go over my records! I bet their nice cars and their hot tubs came from our 401(k)! I have sent an email to the department of labor for some guidance as well. If there are any attorneys on this board I sure could use some sound legal advice!

KEEP QUIET (at work) UNTIL YOU DH HAS FOUND ANOTHER JOB and contact an Attorney ASAP! You can't borrow to pay peoples salary! Unbelievable, that would be like me taking money out of the drawer at the grocery store to pay for my groceries!! STEALING. any way you slice it or rationlize, it is stealing!

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Vicki


TLJ Women united in Spirit!

Hi! I work in payroll and not only take deductions but often pay the 401k billing. While most employers pay 401k right away the plan documents often state that the employer has X amount of time (3mos in some cases) to pay the contributions. If you question it contact the 401k holder / servicers. They should be able to tell you how long the company has to make the contributions. The 401k company wants your money there as much as you do - they are a good place to start.

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saraedawson@yahoo.com

Mommy to Jake, Alexis, Abigail and Joshua, Wife to Matt

Let me get this straight your dh employer had to take money out of the 401k plan to pay everyone...I would find another job. What they did was fraud and is this a stable company to work for?? If they cann't pay the employees they are not paying other bills. Just think if they stopped paying their part of the healthcare and you find out too late that you have no healthcare covered.

SaraBeth is correct as far as the legality goes.

The employer has a certain amount of time to make the deposits into the plan. Some employers do this weekly, some monthly and some quarterly.

HOWEVER, just because they are acting as possesor of the money, they do not have the right to spend it. This is called co-mingling of funds and it is illegal.

Filing a suit would likely bring you nothing more than the lost interest, if that.

Was the employer supposed to be MATCHING you deductions?

Unless your DH can get a bunch of other employees that were also victims, I would think a lawsuit would be a waste of money.

I would be looking for a new job with a new company, pronto.

In the meantime, a letter to the plan administrator ( Prudential, etc) and the IRS would be in order.

wow I'm sorry this happend to you .. I would contact an attorney and see what can be done . I would think you would get your court fees, interest and your money back from them.

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Too many people spend money they haven't earned to buy things they don't want, to impress people they don't like. - Will Rogers

That is very valuable information, thank you. I do plan on contacting them. My husband is stopping his contributions ASAP.

A 401K doesn’t actually pay interest so it would be difficult to actually prove you lost money and in fact you may not have, depending on what the market was doing at that particular time.

Depending on what the money is invested in if the market was high when they should have invested and down when they actually did it would have bought more at the lower price, so over time you would actually come out ahead. You would have to go back and track each investment to determine if you lost or gained in the short term. Either way it would probably not be worth going to court over in a monetary sense.

I agree with everyone else I would be looking for a new job though.

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"Selfishness is not living as one wishes to live, it is asking others to live as one wishes to live."
-Oscar Wilde

You should be able to contact the Attorney General for your state and talk to someone in the office, then they should take it from there. Make sure you send out your dh's resume (it sounds like he's not so inclined, so once the place is shut down, he'll have somewhere else to go).

Once your husband puts in the request to have them stop taking money out for his 401k, I think they have to put it into effect at least by the next pay period. Good luck!

Thank you. I will also contact the Attorney General. I am not looking for money, just want to make sure they are not stealing the employees money. Who knows what happened before I found this. I have been encouraging my hubby to start his search ASAP. I suspect now that we are "on to them" they might try to fire him, however they would not have any ground to do so.