Is my employer playing silly buggers with our 401K plan?

Djeet

Eventhough my salary hasn't changed, my contribution hasn't changed, the employer match has dropped to a small fraction of what it used to be. We received no documentation that this change was to take effect; my paystubs for the entirety of 2011 reflect this change. Is the company (plan administrator) not supposed to give some kind of notice of any changes to the 401K plan? And can an employer just arbitrarily reduce what I see as part of my compensation without any notification to me? I'm in Texas.

In this example I've changed all the particulars, but I use nice round numbers, so it should give a picture as to what I'm talking about.

5% of 52K = 2600

$100 employee contribution per pay period (PPP)

50% of 2600 = 1300

$50 employer match PPP

When logging into my benefits portal this is how it looks every 2 weeks since I began participating (I'm fully vested).

Now (and for some time back) it looks like this every 2 weeks:

$100 employee contribution PPP

$2.5 employer match PPP


Doing some quick calculation shows that instead of doing 50% of employee contribution (up to 5% of salary) ... he's doing 5% of 50% of employee contribution (up to 5% of salary). I've confirmed with other employees that their employer match has changed exactly how mine has. Through skuttlebutt I've come to know this is not a clerical error, he just decided to change it to this, and will not be changing it back.


5% of 1300 [50% of 2600 = 1300] [5% of 52K = 2600] = 65 or $2.5 PPP

Basically I'm looking for perspectives from (1) plan administrators or anyone with experience in that field or (2) anyone who's been in this situation before. Reading the DOL site gives only high level information, and I wanted perspectives from people who might have been through this or know a bit more about this before I actually dig into and read the entirety of ERISA (wikipedia page has more info than DOL site, but it doesn't seem very complete).


Edit: Dammit. This was supposed to go into H/A. Halp?
Edit2: K, got it posted to H/A. Do I need to delete it from the Bug forum, or will that delete it here too? Sorry.

Thanatos

The first step should be to ask your plan administrator what's up. It could be a clerical error or something like that.

Dr. Frenchenstein

I think companies can do whatever they want with a 401k match policy, or any policy honestly (benefits, etc). Your only recourse is to leave. He might as well have taken it down to nothing though, 2.5% match is like a slap in the face.

it sucks dog balls that your management didn't tell anyone, and just changed a policy. it's dirty pool, but i don't think it's illegal in any way. At least, not in the US. they only thing they can't change is your salary.

Djeet

Plan admin is the CEO. Still in info gathering mode before I talk to him. The reason I think it's not a clerical issue is I've been conferring with other employees about this and one guy just got back to me after having a meeting with plan admin/boss about this. This is apparently the new match and it's here to stay. Plan admin says to this employee basically what Dr. Frenchenstein says (there's no law against my changing this). DOL site indicates that whenever the Summary Plan Description changes the plan admin must give updated Summary Plan Descriptions, however it's unclear on the time table, which I may have to go into ERISA to figure out, if it's even defined.

From what I can infer, they can change the match/retirement plan at will, but I'm not clear on if they have to inform us of such changes before or on the day it hits our 1st payroll which it effects. Of if they can make a change and then a year later, print out an updated Summary Plan Description on request.

Basically I'm annoyed that we've been played unfairly with. I'm not the type to sue, but I am the type to figure out what I can do to make myself feel better about this. I know I cannot rollover the 401K out of plan while still employed, but I've read stuff that indicates I might be able to rollover the employer match. If anything, this crap has just stiffened my resolve to GTFO of this company.

Dr. Frenchenstein

Yeah, it's good business to inform your employees of whatever changes are going on, good or bad. I'm betting he didn't tell anyone b/c it wouldn't be popular. A lot of executives have that "out of sight, out of mind" mentality. "oh nobody's emailing me, so nobody noticed!" Actually, they are just seething and want your head on a spike!

If you are vested, that match is your money and can roll over when you leave. even the pittance you are getting now.

XArchangelX

Yeah, I would also take a close look at the fine print and if you can roll the whole thing over to a Roth IRA right now. First thing though is to reduce your contribution to the match and go fire up a Roth if you haven't already. Free money is free money, so always take up to the match, but the fact their screwing around with their peoples retirement like that is a bad overall sign. Take a good look at how the company is doing, and maybe start getting more active with networking and looking elsewhere. A company doesn't reduce 401k matching because their doing super well.