401k Contributions
Planning for retirement should be something that everyone should do with their 401k contributions. For young workers just starting out, you may think you shouldn’t have to worry about this but the sooner you start the better. If an employer provides the option to make 401k contributions then it’s a good idea for employees to participate no matter how old they are. Although most 401k plans are well managed, there are times when things can go wrong. If you suspect contributions are being misused, here are some signs to watch for.
If a plan statement shows up late or is not received at all, it may be an indication that something is not right. Some plan statements are issued quarterly and others annually. It’s a good idea to find out from the human resources or payroll department when statements are sent. If an employee has not received their statement within 30 to 60 days after they were supposed to, it’s worth it to check with the plan administrator and see what the holdup is.
One way to monitor an employee’s plan is to check paystubs. You should look at your paystubs and make sure the 401k contributions on the check stub matches the amount on the plan statement. If the amount is off it should not be off by more than one or two pay periods. Most plan providers allow employees to check statements online. If the numbers don’t look right then you can consult with a representative at work. If the results from doing this are not satisfactory then you can call the plan b provider directly. Any other complaints after that can be directed to the Department of Labor.
If money is not being put into the account in a timely manner this could be an indication that the account is being mismanaged. If an employee gets paid twice a month but it’s not being reflected on the paystubs that money is being taken out for retirement, it is worth it to raise some question. Most employers have 15 days to deposit money into accounts. If this is not happening then they need to take it up with their job.
Although how a 401k plan performs on the market can vary, there should still be some consistency in the growth of the account. Check benefits to make sure they are increasing over time and not continuously decreasing. There may be a short period where the account balance falls due to unstable economic conditions but over longer periods of time there should still be some growth. If money begins to continuously disappear then it may be an indication that a company is in financial trouble and have used the funds to take out loans. If this is suspected you can request forms 5500 or 5500-c/r you’re your employer to see the overall financial situation of the company.
There may be something wrong if a statement reflects 401k contributions that an employee did not sign up for. If there is a situation where you’re seeing contributions you are unaware of, this could simply be the result of an administrative error or it could mean that something more serious is the problem. If an employee notices this it is important to bring this to the attention of a plan representative immediately to make corrections. If online management is available, you can often times correct this problem over the internet.
If you are able to, it is worth it finding out if previous employees are receiving their benefits on time. If former employees are receiving late benefits or benefits that are the incorrect amount, this could be a sign that current workers will have trouble somewhere in the future. If you suspect funds are being misused, immediately contact the Department of Labor to inform them of the situation.
You should regularly monitor your 401k contributions to make sure they are being used properly. There are many signs that can be an indication that the plan is being mismanaged or abused. If one suspects mismanagement, there are several routes that can be taken. Employees can talk to a representative at work, contact the plan administrator and even speak with the Department of Labor. You may also be able to fix problems online if you have access to manage your plan over the internet. Don’t make the mistake of not monitoring a 401k account. Waiting until you have retired may be too late to do something about any problems that may arise with an account.