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Employer delinquent in retirement SIMPLE plan funding

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My small business employer has not funded my SIMPLE retirement plan in 5 years to the tune of 65K.   My W2 statements show the "retirement plan" and amounts.  The IRS has not questioned these with me.  I have been patient, but it is wearing thin, I am considering 3rd party action.  Who should the 3rd party be?  Dept of Labor?, Private Attorney?

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Former controller here of a few different entrepreneurial small businesses, family-owned, and otherwise, the common them... (more)

Claymore (Mar. 26, 2017 @ 8:30a) |

Not for the past five years they haven't.
Like Claymore said, they're either paying themselves with your money, or they'r... (more)

taxmantoo (Mar. 26, 2017 @ 8:54a) |

Many thanks for your input I value your experience in this matter.

DoItYourself (Mar. 26, 2017 @ 10:00a) |

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First thing Monday morning, call the DOL at this number.  1-866-275-7922

https://www.dol.gov/ebsa/newsroom/pr041202.html
 

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I'm sure your state's Department of Labor (or similar) would also be interested.

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Why haven't they been funding it? And why have you let go on for 5 years?

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Did they ever fund an account? Are you sure they didn't set up an account for you somewhere?

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A: OP makes ~$450K a year and the employer is not contributing the required match. - This is kind of bad.
or
B: OP's employer has been deducting employee contributions and not depositing into the employee's retirement account for 5 years. - This is criminal theft.
 

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DPG said:   A: OP makes ~$450K a year and the employer is not contributing the required match. - This is kind of bad.
or
B: OP's employer has been deducting employee contributions and not depositing into the employee's retirement account for 5 years. - This is criminal theft.

  Its B.

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stanolshefski said:   Did they ever fund an account? Are you sure they didn't set up an account for you somewhere?
  It has been funded in the past.

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jerosen said:   Why haven't they been funding it? And why have you let go on for 5 years?

Why is poor business practice.

Why 5 years is sympathy.

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DoItYourself said:   jerosen said:   Why haven't they been funding it? And why have you let go on for 5 years?

Why is poor business practice.

Why 5 years is sympathy.



Are they truly inept? Or are they ripping you off?

Either way they would have to be next of kin relatives for me to be sympathetic after 5 years. Is this a family business?

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jerosen said:   DoItYourself said:   jerosen said:   Why haven't they been funding it? And why have you let go on for 5 years?

Why is poor business practice.

Why 5 years is sympathy.



Are they truly inept? Or are they ripping you off?

Either way they would have to be next of kin relatives for me to be sympathetic after 5 years. Is this a family business?


Not my family business however its like family. Inept and ripping me off are both in question.

So here is my dilemma. Without proper notification to employees the company has not run a valid retirement plan in the past decade. They continued to allow me to defer compensation to the defunct plan without making contributions to the plan As far as I know I am the only employee affected. Yes they are in trouble no matter how this is resolved do I keep it more personal and private or report to state and feds.

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I know this will go without saying, but I hope OP's priority now is getting another job lined up.
Having to explain last employer was shut down due to fraud + being unemployed will not make you look well at interviews.

- In the "best case" scenario, they will liquidate the business to raise the money + penalties + interest.
- Worst case, business+owners are judgement proof and OP watches boss go to jail in lieu of having a retirement.

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since you said 'family run' it could be the manager is just an idiot and didn't fund it because they forgot it exists.
Did you ask them to fund it?

However 5 years....you probably won't have a job soon anyhow so you might as well call the DOL and get a whistleblower cash.

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forbin4040 said:   since you said 'family run' it could be the manager is just an idiot and didn't fund it because they forgot it exists.
Did you ask them to fund it?

However 5 years....you probably won't have a job soon anyhow so you might as well call the DOL and get a whistleblower cash.


I made many requests over the past 5 years.

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ThomasPaine said:   I know this will go without saying, but I hope OP's priority now is getting another job lined up.
Having to explain last employer was shut down due to fraud + being unemployed will not make you look well at interviews.

- In the "best case" scenario, they will liquidate the business to raise the money + penalties + interest.
- Worst case, business+owners are judgement proof and OP watches boss go to jail in lieu of having a retirement.


All are things I have considered and am weighing carefully.

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DoItYourself said:   My small business employer has not funded my SIMPLE retirement plan in 5 years to the tune of 65K.   My W2 statements show the "retirement plan" and amounts.  
  
Do all employees have this issue?    Is it possible that they can say they simply terminated the plan (although you say that your W2s show amounts).    

Unless my math is wrong, $65 over 5 years is only possible via salary deduction + matching in a SIMPLE IRA.  If the employer is doing the 2% non-elective contribution and the employee is not participating in the salary deduction, then I believe that is capped (e.g. 2% of compensation up to $270,000 = $5400 for 2017).  

So not only is the employer not depositing salary deduction amounts (which have to deposited within 30 days), but they are also failing to deposit the matching amount (due by the company tax filing date).    I wonder how the penalty for this compares to failing to send in payroll tax withholding,

https://www.irs.gov/retirement-plans/simple-ira-plan-faqs-contri...

I'd take have my pay-stubs and the last few years of SIMPLE IRA statements as evidence for the complaint.  



 

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JohnnyF said:   I'd take have my pay-stubs and the last few years of SIMPLE IRA statements as evidence for the complaint.
half?

I suggest taking the WHOLE pay-stubs. [/terrible sarcasm]

  

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DoItYourself said:   All are things I have considered and am weighing carefully.
 
It sounds like you know you're working for a business past the edge of solvency, and are worried about being that "feather that broke the camel's back".
Don't.
Businesses may ask for paycuts, or extra hours but NEVER get their employees to finance them..

:NSFW, but must watch: **** You, Pay Me



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Report them to state and federal asap.

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Check if you still have

Health Insurance
Unemployment Insurance

There were 3 steps, and the 3rd is where even I went, why am I working here.

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You say you have made numerous requests. What exactly does the employer tell you?

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Ecuadorgr said:   You say you have made numerous requests. What exactly does the employer tell you?
In every case its we'll get caught up.  I have no reason do doubt they have always managed to.    

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Thanks everyone for your valuable input. I've decided one more chance is all I can muster. I know sadly however this is really just the tip of the iceberg. I hope they take all the steps needed to make this right for the long haul.

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Thanks everyone for your valuable input. I've decided one more chance is all I can muster. I know sadly however this is really just the tip of the iceberg. I hope they take all the steps needed to make this right for the long haul.

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Former controller here of a few different entrepreneurial small businesses, family-owned, and otherwise, the common theme is that they are often "zombie" companies that are muddling along neither making or losing much money. One of the primary reasons for this is that the owners simply suck up any cash generated and convert it to their personal assets, leaving the company under-funded and unable to make truly optimal decisions. I believe I have seen both nefarious/intentional/strategic abuse and stupid/clueless/"how can these guys possibly have survived?" versions of this story.  It doesn't matter in the end.  The important factor here is that employees like you are paying the owners to employ them. That's why we have laws about the use of money held in trust, and a DOL that exists to protect employee interests.  

I hate to tell you this but your money is likely gone, and the longer you wait, the more of it will go away.  Everyone here is right, you need to get someone (Lawyer, DOL, State, your choice) to help you.  I am not a CPA and not a lawyer; Your situation my have other factors that come into play...., but here are the things I would recommend you *think* about before acting: 

1. Do NOT tell the owners anything more than you already have.  You'll just tip your hand and allow them to prepare.
2. Get a lawyer.  Labor attorneys are trolling everywhere.  I'm sure you'l have no trouble finding a good one.
3. Gather all the paper and electronic documentation you can possibly think might touch this situation in ANY way, and archive it for your discussion with your layer.
4. Plan to lose this job.  You should even if you don't file a claim. They're stealing your money. 
5. Be prepared for the owners to play really dirty pool (Think counter-claims, on-the-spot-firing, criminal accusations....).  Threatened entrepreneurs become irrational, mean, vindictive animals very quickly.  Put yourself in their shoes; Getting another job if their business fails is outside their imagination and realm of possibilities.  It won't even occur to them.  The answer to 95% of this warning appears in item #4 above.  You really need to get their hands off your purse-strings.  
6. See item #2 above.  You can talk to one for a couple hundred bucks and from what you describe these bozos owe you many thousands, plus interest !!
7. EDIT:  Also you will want to ACT FIRST - Maybe your claim will be paid.  Last in line is last in line.  

There's no happy ending to this, just mitigation of the losses you have already incurred.  Good luck! 

 

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DoItYourself said:   
Ecuadorgr said:   You say you have made numerous requests. What exactly does the employer tell you?
In every case its we'll get caught up.  I have no reason do doubt they have always managed to.    

  
Not for the past five years they haven't.
Like Claymore said, they're either paying themselves with your money, or they're skipping their pay and your pay to cover the business' bills.
If they and the business are broke, there might not be a satisfactory ending available to you.

At the very least, quit loaning them another $1000 of your money every month. (drop the SIMPLE contribution to the 3% they have to match)

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Claymore said:   Former controller here of a few different entrepreneurial small businesses, family-owned, and otherwise, the common theme is that they are often "zombie" companies that are muddling along neither making or losing much money. One of the primary reasons for this is that the owners simply suck up any cash generated and convert it to their personal assets, leaving the company under-funded and unable to make truly optimal decisions. I believe I have seen both nefarious/intentional/strategic abuse and stupid/clueless/"how can these guys possibly have survived?" versions of this story.  It doesn't matter in the end.  The important factor here is that employees like you are paying the owners to employ them. That's why we have laws about the use of money held in trust, and a DOL that exists to protect employee interests.  

I hate to tell you this but your money is likely gone, and the longer you wait, the more of it will go away.  Everyone here is right, you need to get someone (Lawyer, DOL, State, your choice) to help you.  I am not a CPA and not a lawyer; Your situation my have other factors that come into play...., but here are the things I would recommend you *think* about before acting: 

1. Do NOT tell the owners anything more than you already have.  You'll just tip your hand and allow them to prepare.
2. Get a lawyer.  Labor attorneys are trolling everywhere.  I'm sure you'l have no trouble finding a good one.
3. Gather all the paper and electronic documentation you can possibly think might touch this situation in ANY way, and archive it for your discussion with your layer.
4. Plan to lose this job.  You should even if you don't file a claim. They're stealing your money. 
5. Be prepared for the owners to play really dirty pool (Think counter-claims, on-the-spot-firing, criminal accusations....).  Threatened entrepreneurs become irrational, mean, vindictive animals very quickly.  Put yourself in their shoes; Getting another job if their business fails is outside their imagination and realm of possibilities.  It won't even occur to them.  The answer to 95% of this warning appears in item #4 above.  You really need to get their hands off your purse-strings.  
6. See item #2 above.  You can talk to one for a couple hundred bucks and from what you describe these bozos owe you many thousands, plus interest !!
7. EDIT:  Also you will want to ACT FIRST - Maybe your claim will be paid.  Last in line is last in line.  

There's no happy ending to this, just mitigation of the losses you have already incurred.  Good luck! 

 

  Many thanks for your input I value your experience in this matter.

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