Company threatening Termination because of 401k questions?
Company threatening Termination because of 401k questions?
I am going to try to break the drama down as shortly as possible. My husband has a 401k and he is 100% vested in a plan that allows loans. In April we filled out a loan application and he was told "no: by the owner because the owner felt he was looking for a new job. We filled out another loan application on July 9th. During these 22 days we have been told that he can get the loan but they will turn over the paperwork when they feel like it, he was also told if he asked about the loan or anyone on his behalf asked about it he would be terminated, today the 401k holding company called my husbands employers asking why they didn't recieve the proper forms and telling them they couldn't hold funds. My husbands employer was so mad that he got this call he told my husband to start looking for a new job while screaming and swearing at my husband...Legally, where do we stand? This all seems very shady and illegal to me, any advice would help.
Answers:
SCH: Your employer cannot withhold your 401k funds...it isn't their business why you want to borrow the money. They can't fire him for looking for a new job, let alone borrowing money from his 401k...If it were me I would roll the 401k into an IRA so you never have to deal with this guy again!!!
Hire a lawyer, this guy sounds insane to think he can hold your money hostage as if he had some claim to it of his own...
2007-07-31 20:21:57
rlloydevans: This is a gray area because the 401k is your husband's money, and the employer is simply there as a conduit. The employer, in this situation, does have an agency responsibility to work on the better benefit of the employee in this situation. Failing to do the paperwork is a fiduciary failing.
Part of the problem is the amount of money involved and the status of being an employee there. if you complasin more, there is a possibility you could be fired, but then, you would probably have a case of being able to show that you were fired due to the fact that you were reporting illegal activity by the employer.
As far as what you can do, you can notify the 401k holding company and notify them that the company administration is deliberately refusing to do the paperwork. Note: this is an SEC and IRS issue, so we are talking a lot of serious problems here.
Second, I would get an attorney, legal aid if you can't afford, a paid attorney if you can, so the attorney can put pressure on the company.
Finally, you may consider reporting the behavior to some or all of the following agencies:
Your State and Federal Attorney General
The SEC
The IRS
If the company is incorporated than the State Corporate Commission
2007-07-31 20:28:11
bikerlbf406: Although the company may be doing wrong & could get in trouble for the 401k paperwork (not sure as I don't know much about since none of my employers ever offered it), I do know that almost all employers have whats called "at will employment", unless there is a contract on the length of employment. This means that they can terminate employment at anytime with or without reasoning. The employ can also do the same.
2007-07-31 20:29:08
Chosen Answer
Jefe': It's not an SEC as someone else said. The SEC doesn't do anything with 401k plans unless there is company stock involved.
You need to contact the US Department of Labor. They enforce the rules of ERISA (Employee Retirement Income Security Act) which governs how 401k plans operate. The employer cannot hold onto to funds that should be paid to the 401k trust. Nor can they deny a loan request simply because they think the employee is looking for another job. As long as the plan document doesn't state that loans are only for hardship reasons, then you should be ok.
An ERISA attorney could help, but it's probably too small of a situation to justify the costs for their services. You're best to contact your local office of the US Department of Labor. 401k Plans are enforced on the federal level, not the state level. Federal laws pre-empt most, or any, state laws that attempt to regulate retirement plans.
2007-08-01 09:24:14