401K Error Question - Retroactive Correction?

[Sweety_tweety]

Does anyone know if a company can retro-actively make a contribution to my 401k to correct an error?

At the end of 2010 our company changed our financial investment company. At the beginning of the year I confirmed with the new company they had the correct contribution percent. Our payroll company and the frequency of our pay also changed. Somehow I missed that nothing was being deducted from my pay since the beginning of January. Ughh!

The new company told me that I must have been having the 401k deduction post-tax. Anyone that had post-tax election were not re-enrolled as post-tax is not an option in the new 401k. I confirmed that my contributions were pre-tax. Our company matches 3% to our 6%. Is there a way that I can make my 6% contribution get the 3%?

I have to talk to our HR dept tomorrow. I am wondering how many others in my company are in the same situation and don't know it.

 

[clh2]

***My answer is a personal opinion...and may not be shared by your HR department****

How often does your employer pay the match? I.e. do they do it every paycheck, or do they do it once a quarter, or in my case, once a year???
Since my employer only pays the matching money once a year, (and I'll use your numbers) if I contributed a total of 6% per year, they would pay the match of 3%. My employer does not care if I contribute 12 % for 6 months, and then nothing for the remaining 6 months.

So - IN MY OPINION - and I'm going to use $120,000 as a base salary, cuz then the math will be easy. at a salary of $120,000, you would be making $10,000 per year. This would be a 401K contribution of $600 per month. So - in this example - you would be "behing" by $1200 on your annual contribution for this year. To "make up for it", you would need to contribute 1/10th of this amount back into your conributions. I.e. if you increase your contributions from $600/month to $720 per month (i.e. up to 7.2%), by the end of the year, you'll have $7200 in your account - which is the same as if you would have contributed 6% all year. Now - you could argue that you'll have lost the compounding of Jan and Feb, and you would be correct...