So this morning I got an email stating that my company took 1025.53 out of my 401k on 12/31/2021 because the company messed up and started matching me before I was eligible for company matching (requires 1yr of employment)
From January 2021 to July 2021 they were matching me based on the percentage I put in. I double checked the employee handbook and it is infact a 1yr wait time before company matching
Do I have a say in this matter legally? is it legal? if it is legal then I’ll just cut my losses and move on but this just seems very unprofessional. This is my first corporate job ever so I’m still very new to everything in the corporate environment.
Thanks
EDIT: wow the replies were fast. Thank you everyone. Mistakes happen and I just wasn’t sure about everything. I appreciate everyone clarifying it for me!
Nothing illegal here. They gave you the match in error.
It’s in the rules. It was a mistake that was not supposed to happen.
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Mistakes happen. They are allowed to take the money back. Curious if they only took back the erroneous match or also the earnings on the match. I have a feeling they only took back the match itself which means you still came out (slightly) ahead.
Don’t stress about it. Same thing with your paycheck. If they accidentally don’t withhold enough tax or pay you too much I’m sure the direct deposit agreement you signed gives them the right to reach right into your bank account and take the money back.
Mistakes happened and they reverted to written policy. Nothing nefarious or unprofessional.
Absolutely legal and I am a business owner who just had a meeting over the phone with our CPA and 401k firm about this very topic. The 401k firm ran their yearly audit on our account and we had some folks underfunded and a few overfunded. Making corrective pulls or pushes on funds is absolutely part of the process from what I have personally experienced. The 401k firm has protocols already in place to handle these situations so yes it’s completely legit and expected. The problem is that there are so many manual aspects of how 401k firms get the figures for how much to fund workers, that mistakes happen even to the best and largest employers. I believe cutoff for corrections is the 31st of January for the prior plan year. I figured I had to chime in as a business owner as there was suspicion about this process being shady but nope, it’s actually quite common.
Not related exactly, but I had a fun error 20 years ago…
When my department was moved from Employer #1 to Employer #2.1, (Employer #1 was a wholly-owned subsidiary of Employer #2) we went from being payed weekly, a week in arrears, to being paid semi-monthly, in-period. The cut-over date was January 1, so for in the beginning of 1995 (I think) I got two paychecks…one for my final week worked at Company #1 in 1994, and one for my first pay period in Company #2.1 in 1995. They were all taxed as if 1995 income.
Great.
Until late January 1996. Some Audit was run on the 401k. Checked the mail, and there was a check for all the money I’d put into the 401k in 1995 from Employer #2.1. It seems somebody saw that I got one paycheck from Employer #1, saw total contributions to my 401k in excess of what I could legally put in as if my pay from Employer #2.1 didn’t exist. Hence the refund of excess contributions.
Boy did I freak out. But… HR was able to fix it no problem, once I got the check to them.
“I’ll just cut my losses and move on but”
You had no loss. you had a incorrect gain that was corrected
It was a mistake on their part. What’s the issue.
I would say the only thing you should check on is to make sure they only took back the money they erroneously put in. It depends on a lot of agreements like the 401k plan and the handbook but I would start with the assumption that any gains realized while the money was erroneously in your account are yours to keep.
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I may be wrong on this though so here’s your grain of salt: 🧂
It’s legal.
And yes, the original ERROR was unprofessional. Correcting it was completely professional; allowing the error to stand would be unprofessional.
HR’s professional priority is to make sure that the company rules are followed evenly among all employees. To allow you to keep the money would be unfair to other new employees who were not given matching funds.
Yes, an employer can take back stuff like this. Even if they sent you an extra paycheck on accident they could withdraw it from your account.
>This is my first corporate job ever
Ya, lets start out by suing your employer because they took back money that you weren’t owed in the first place.
You may find these links helpful:
– [401(k) Fund Selection Guide](/r/personalfinance/wiki/401k_funds)
– [401(k) FAQs](/r/personalfinance/wiki/401k)
– [“How to handle $”](/r/personalfinance/wiki/commontopics)
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If they made the error they can take it back so long as enough time hasn’t passed to correct it, usually a couple years or so (statue of limitations).
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