[USER]

I’m very frustrated anyone please give me.

advise. I’m from California. My company outsources all benefits handling to the third party. They suddenly contacted me, without including HR, saying that they ‘miscalculated’ the 401k matching for a couple of years and gave excess money to me. Now I need to pay back $xxx amount to my employer at once. I asked the breakdown on how much % was miscalculated for each paycheck, and how will the money taken IF I need to. They say that payback has to be made from my 401k contribution, and no answer to breakdown.

Do they have a right to do it? Do I need to return the money if that’s their 100% fault? If so, I don’t think it’s fair that I need to payback from my contribution not by paycheck. I reported HR since whole conversation was made without HR, she only said ‘that’s legit, not scam’ and never mentioned, publicly announced, or apologised about details. Appreciate any advise!

[Kelly]

Sounds like you already confirmed with HR that it is legitimately from the company. (I would double and triple check). Do you not have statements and/or back paychecks where you can check the calculations, as well? If so, it is what it is. People make mistakes contributing to their own IRAs, too, and have to correct it. They would have every right to pull the money back out.

You shouldn’t care, because it’s not money that was promised you, and all the burden of fixing it is on them. The part that makes it sound like a scam is the request that the payback come from your contributions.

Employer contributions and employee contributions are tracked separately, and they should be able to correct this directly in the account from the employer contributions.

The advice to lawyer up only makes sense to me if 1) you’re positive it’s not a scam and 2) are pretty darn sure that they are in the wrong (i.e. that the matching calculation was correct).

[Steve]

If legit, they’re going to get it back, but I would put my foot down on the breakdown/composition of the overpayment. You will have to comply, but you (and the custodian) are owed evidence.

[Joe]

Sounds like a scam. I’d tell them to contact a lawyer if they want it back.

[Trung]

I would fight it to the end, but I think legally they can do that. HOWEVER, think of it as an interest free loan that you got some gains from investment.

[Heiress]

How do they decide what security they’ll liquidate to get the money back. I think it’s only right for them to get it back but maybe take it from your future cash contributions. ERISA laws can be complicated and this is one area that they do not want to be flagged in.

I’d say start with calling the NLRB. If you have a case, they’ll take it and let you know if you have a case as far as the method in which they get their money back.

If they take your case, it becomes the federal government against your employer.

They don’t want the NLRB poking around.

Don’t miss: Does 401k match from employer count toward max limit?

[Audrey]

At least it isn’t the Army. They just take that overpayment back without thinking twice.

[Dané]

Sounds scammy. Get a lawyer if HR says the same thing.

[Kevin]

Mistakes happen in payroll. If they paid you more money then they should have the money wasn’t yours and they can take it. Happened to me a few years ago. I didn’t have to ‘pay’ them per say. They just went in and took the money from my 401k.

I wasn’t mad because I should have noticed the additional contributions and didn’t.

Worth a look: Should I put all my funds into the 401k and open a Roth with another brokerage? Or do both options through the company?

[LeAnne]

Sounds like a scam, but I’d check with HR. Make sure to use contact information that’s provided by your company not the potential scammer.

If your HR team confirms the overpayment I’d get legal advice outside the company. California has labor laws that forbid employers from pulling money back, but not sure it’s relevant to this particular situation.

Don’t sign anything and consult with an attorney.

[Lizzie]

You can contact EBSA, which is part of the Department of Labor. They have a phone number online and a messaging portal (should be easy to find on Google). That would be a good place to start to understand your rights under ERISA and the plan.

It would probably be helpful for you to get a copy of the plan’s Summary Plan Description, if you don’t already have it.

[Darrell]

You need to do your due diligence and make sure that this is real.

That being said mistakes happen and if you have overpaid into your 401k they will likely have to do this in a way that pulls it back from the 401k.

Depending on how much it is I might talk to the company about covering part of it for me since it was their mistake. Understand though, they have to comply with federal law so the money will likely have to come out of the 401k contributions.

Take a peek at: Do I contribute to a ROTH IRA, increase my 401K contribution, or somewhere in the middle?

[Jas]

Contact HR ASAP before talking to this company again. Find an attorney who knows employee benefits liability if necessary.

[Edward]

First, contact YOUR HR Department DIRECTLY. Do not use a phone number or link provided in the communication you received.

Second, research online about rules/laws regarding overpayment of employer contributions to 401(k) plans so you have some understanding of your rights.

[Nicole]

So, I’m HR and payroll and everywhere I’ve been they can request payback of overpayment but depending on the dollar amount this should not be really impacting you and should be negotiable based on laws. I’m not sure why they are insisting to do it via payroll deduction though… they should contact the 401k provider directly and see about just recouping the funds from there back to the company…. secondarily they could withhold any further employer match until you’re “caught up”…

Lastly you could keep everything the same on your side and they could just recoup from what you’re already contributing to 401k from your check until you’re caught up (maybe in addition to withholding further employer match to speed up the process). Again hard to say cuz it depends on dollars amount but seems like those questions should be asked if they attempted those other options first.

It’s not like you were overpaid actual wages for money and it’s sitting in a bank that you can just access.

[Author]

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