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Asked 10/12/2011
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Employer held 401K funds for over a year, then refunded Employer withheld funds for 401K contribtuions for 18 months, did not deposit, then refunded what was withheld - do they not owe interest on what if could have earned in that time? Company is filing bankruptcy now and not sure what legal rights are and concerned with losing job (such as it is) if push issue. Cannot be without unemployment between jobs |
Answer 1/2 - Submitted 10/12/2011
If the company is filing bankruptcy, you're lucky to get your money back.
Of course, it was a major wrong for the company not to match your contribution, but at this point, in bankruptcy court, you might have gotten even less than your contribution back, in exchange for getting maybe a little sick leave and vacation time pay upon severance.
A bankrupt company is in no position to chip in more for interest. Anyway, considering that banks are paying about zero interest now on savings, your interest amount is worth making waves, if you think they'll try to fire you on some trumped-up grounds that could prevent you from getting your unemployment compensation.
Answer 2/2 - Submitted 10/12/2011
401k contributions are supposed to be deposited into participants' accounts "as soon as administratively possible". I believe that phrase is the exact phrase required by the IRS and Dept. of Labor. They really screwed up bad, nearly criminally, by not immediately depositing deferrals. One week is now generally considered too slow, let alone 18 months.
That said, considering that the company is going bankrupt, you are fortunate to get a return of your money. The company is like a dead cow in the desert, with birds and coyotes circling, hoping to get a piece. You getting 100% of the money is a correct legal decision by the judge, as those 401k deferrals have highest priority. Most of the people that are owed money by the company will get zero.
File for unemployment, and immediately start working 40 hours per week on your job search. I would use this story as evidence of how badly run this company was.
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