Employer reneging on 401k matching
Our employer enforces mandatory withholding in the 401k plan every payday, which appears to be done correctly and timely. As per our benefits contract, the employer is supposed to match our contributions at 3%. This is paid at the end of their calendar year, not on our bi-weekly payroll. This year, we were notified on 1/26/2017 that they will not be matching our 2016 contributions. Can they can legally refuse to match? If the Employer benefit is changing, should we have been given notification prior to year end?
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You should have received a Summary Plan Description when you were setup in the new plan. That'll have the details on how the match is structured. If it's a 'discretionary' match, then the employer can do whatever they want as long as it's uniform (including no match at all). If it says they will match x%, then they are legally obligated to do so. The Plan Document language takes priority over your benefits handbook.
Short version - ask for the Summary Plan Description or Plan Document and see what it says.
Employer contributions to a 401K are not mandated by law so they are well within their right to not contribute.
There is likely language in your benefits handbook that indicates employer contributions are contingent upon sufficient profits.
If you do indeed have a contract that states the employer will contribute 3% without exception, then this would be a contract violation. You could attempt to talk with HR/ownership, but you may also need to see a lawyer.
Most employers avoid "painting themselves" in that kind of corner.
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