My wife's a federal contractor employee. During a meeting when first hired all employees were informed that $3 would be coming out of their hourly wage to go toward a mandatory retirement plan. Some balked but were told it was mandatory. There has been nothing on their paystubs to indicate money going toward retirement. No plan was selected until the 8th month of the job. A month later, a lump sum amount was placed into her account reflecting coverage for each of the previous months of employment. The company who manages the account informed her that her plan was profit sharing and that the employer could deposit funds whenever? Sound fishy to anyone??

Did she receive any information or a propectus about that retirement plan?

Unfortunately that is not that unusual. I would have her get information on exactly what time of plan it is. IT can not be profit sharing if she contributes.

If it is a 401K plan then this is the rule:


11. What information and reports is my employer required to provide me with on my 401(k) plan?
Your employer must provide you with a Summary Plan Description and an annual statement of your account information. You have a legal right to ask the plan administrator for a copy of the plan's latest Form 5500 or Form 5500-C/R, the summary plan description, the plan document, the trust agreement setting up the plan, if separate from the plan, and any collective bargaining contract, if appropriate, and any other instrument under which the plan was established or is operated.

In addition, you will often be provided a prospectus for every fund offered in the plan, but this is not legally required. If your company's stock is offered in the plan you are required to receive a prospectus on the company stock fund.

12. How soon does my employer have to deposit my contributions deducted from my pay into my 401(k) account?
Government regulations require that participant contributions to a 401(k) be deposited to the plan on the earliest date that they can be reasonably segregated from the employer's general assets, but in no event may they be deposited later than the 15th business day of the month following the month in which the participant contributions are deducted from their pay. Please note that your employer can not wait until the 15th business day of the month following the month in which your contribution was deducted just for the convenience of doing so. If they can deposit the funds in sooner, they must do so.

If she took a job that required her to take a pre-tax cut, then it should have provided information in writing on this and an ongoing accounting. The US Department of Labor usually is the enforcement department for this type of matter. It usually falls under ERISA. If they are a federal contractor other agencies and stricter rules may exist.


Some links:

http://www.401khelpcenter.com/
http://www.retirementplanblog.com/-401-k-plans-departme...d-401k-deposits.html
http://www.irs.gov/retirement/article/0,,id=119625,00.html

Thanks for the replies...
What if the employer states to the employees that the money is coming from their hourly wage but does not reflect this on the pay stubs. Can the employer then state to the company where the plan is being held that the contributions are from him on behalf of the employee and still be within the law? They were told it was a mandatory plan (federal contractors) that being said, can the employer wait until they feel like establishing the plan even if the employer is contributing his own money (profit sharing)?

You are asking questions of law. Are you saying employer or employee. There are rules. They must be followed. If you feel there is a problem, you need to contact the Department of Labor for help.