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chocklita

My NY charter school dropped my 403b without my knowledge

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I found out today (as I was preparing to leave my job believing I had finally reached my 100% vesting) that my employer dropped my 403b plan 6 months into my employment without my knowledge, notification, nada. Is this legal? I work in a charter school in NY. 

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Hi chocklita,

Can you provide any more details? Who was the vendor? How long have you been at the school? Did your employer say that they tried to contact you and co-workers? Thank you. - Dan 

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To answer your question, yes, this is legal. Your employer can select and/or replace whatever vendor they want for a 403b. The same way they can swap out your insurance company every year. It is an employer sponsored plan; they’re in control. I suppose it is conceivable that a state or local government might voluntarily put restrictions on exactly how and if this is done, but that’s an area I can’t speak to.

Your post was very short on details...

100% vesting for what? Employer match to your 403b? Pension? What?

What was the vesting schedule?

What do you mean they “dropped” your 403b vendor? They stopped new participants from using it? They stopped existing participants from continuing to use it? They forced existing participants to roll the account over to another vendor? What?

Your post gives the impression that you worked at this job for a long time after the 403b was “dropped”. So what was happening to the contributions you were presumably making? Did they just stop? Did you not notice? Did they get diverted to another 403b? What?

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Sorry for the long response time. I can't do anything until I receive a transaction history from Principal (carrier of the 403B), which takes weeks. 

Let me provide more details, I apologize now for using any incorrect terminology as this is not my field and I am learning. 

After 5 years working for my charter school in NYC you become "fully vested" (Yes, Ed, employer contribution), so I decided to check my retirement account at Principal. (Full disclosure, hadn't checked it in 5 years. (And side note I am paying dearly for my ignorance and many things I did not fully pay attention to and won't do again, lesson learned). Anyway, I just trusted this money was there, etc. So I was shocked to find out that there is/was 0.00 dollars in this account. I'm like, what the hell?

So I call principal and they tell me that I was enrolled at 4% in Sept 2014 and my employer changed my contributions from 4% to 0% in Aug 2015. I was never notified, knew nothing about it and would guess that this is some clerical error from someone who had been doing their job a whole of 2 months. Bottom line, I'm thinking I have retirement contribution. And in traditional Charter school style turnover the people in HR now aren't the ones from 5 years ago. They are telling me that I never enrolled. Principal says otherwise and I've been waiting on this document for a minute. As of Sept 1 I will also no longer be an employee, so they aren't going to get an opportunity to make it right by allowing me on the 403B at this point. 

My questions: is this legal, is it worth pursuing? I know I'm out what I should have put in but I at the very least want to file a complaint  (with who?) and the most maybe recover the 4% my employer should have been contributing to this account. 

What should I do now?

Thanks for your help and advice!

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Chocklita

Did you receive monthly transaction notices? Did you and your employer  both contribute to this 403b ?. I'm sorry but I am still struggling to understand your situation. The employer can stop a plan it offers going forward and they should have notified you of any changes going forward in writing. But the money that was in the account can't just disappear. It should be yours.

You must have some paperwork/statements  somewhere that shows the progress of this account over the years. Any year end statements?  

Also how much money do you think was in this account and how much actually was  your earned money if any?

Please try and fully explain your situation .  For now on you need to save your documents and check them for accuracy every month in any new plan you may enroll in and file it. You can/should also check your accounts online.

Tony

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No, I never made contributions and there was never any money put into this account. So therefore, I never received a statement. To be honest, I didn't know you received statements so I was never looking for one. My issue is that they lowered my percentage to 0% without any type of notification to me, essentially dropping my plan. Is this legal? I want to file a complaint somehow so that this doesn't happen to other people at this school. OR is it not illegal and I should move on?

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20 hours ago, chocklita said:

No, I never made contributions and there was never any money put into this account. So therefore, I never received a statement. To be honest, I didn't know you received statements so I was never looking for one. My issue is that they lowered my percentage to 0% without any type of notification to me, essentially dropping my plan. Is this legal? I want to file a complaint somehow so that this doesn't happen to other people at this school. OR is it not illegal and I should move on?

There are a lot of questions that you have not answered.

Bottom line, if you have no paperwork that substantiates that you were enrolled from Principle, at least temporarily, then you have no case. If you have the paperwork that you enrolled, then the question is why were you dropped? 

Steve 

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I would like to add to everyone's comments  here because you are not being very clear in your communications.

Since you have no money in it  and made no contributions and   you left the job  how is this an issue for you ? or do I still misunderstand?

 

Tony

 

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I don't have statements because no money was actually ever put into the account. I have a letter from principal that states that i was enrolled at 4% and then my employer changed my percentage to 0% approximately 6 months later without any notification to me at all. My question is whether this is legal. My employer states I was dropped because I never enrolled. This is false because i have a letter from principal stating that I was initially enrolled. Is it legal for an employer to go in and change your percentage without any notification to me? 

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Hi.  As you can tell, those of us reading this are having trouble understanding what sort of agreement/plan you had with your employer.  The letter that says your are "enrolled at 4%"--does it describe the plan?  Enrolled in what? 4% of what?  Where did the money come from, where was it invested?

Was it a 4% deduction from your salary?  403(b) plans are typically based around deductions from your paycheck that are invested in the account (there are usually options about where to invest that money that you need to complete as well).  If you are also paying into a pension program, the 403(b) is typically 100% funded by deductions from your income.  If there's no pension plan, you may have an arrangement similar to many 401k accounts in the private sector, where the employer matches your contribution up to some limit (could be 4%).  But that is a match to your contributions from salary -- you get zero from the employer if you contribute zero from your paycheck.  

I think you really need to figure out what happened here--what you were led to believe, what changed.  Have you asked the benefits office at your (former?) employer for clarification?  I think we could be more helpful if you were to do that and relay to us what they tell you.

My fear is that you had the option of a 403b with an employer match, but you never completed setting up the account so you got none of that benefit.  In that case, take it as a lesson learned and a motivator to research how retirement savings work these days.  It is a shame that Americans are expected to take so many actions, make so many decisions and navigate so many sales pitches when saving for retirement, but that is the current reality: if you don't learn about saving for retirement, you will lose out.

 

PS:  After posting this I noticed that you wrote "My employer states I was dropped because I never enrolled."  This seems consistent with my fear outlined above.  

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Most (all?) of us on this forum have experience in public schools where an employer match is very rare. Your experience with your charter school is unfortunate but I doubt if you have any legal recourse. Your failure to establish communications and confirm an account would seem to place you as the cause of the problem. The employer contribution was apparently a match that required your contribution. Your failure to sign the paperwork to start your contribution was your choice.

Granted, the charter school was apparently negligent in not detailing the required steps for the match contribution to take place. I am not a lawyer, but it seems unlikely a lawyer would take your case. Contributions to a 403b plan are set by the calendar year, and even if you had caught this during the year after your first year, I don’t think you would be allowed to make up the first year.

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On 9/22/2019 at 3:59 PM, whyme said:

Hi.  As you can tell, those of us reading this are having trouble understanding what sort of agreement/plan you had with your employer.  The letter that says your are "enrolled at 4%"--does it describe the plan?  Enrolled in what? 4% of what?  Where did the money come from, where was it invested?

Was it a 4% deduction from your salary?  403(b) plans are typically based around deductions from your paycheck that are invested in the account (there are usually options about where to invest that money that you need to complete as well).  If you are also paying into a pension program, the 403(b) is typically 100% funded by deductions from your income.  If there's no pension plan, you may have an arrangement similar to many 401k accounts in the private sector, where the employer matches your contribution up to some limit (could be 4%).  But that is a match to your contributions from salary -- you get zero from the employer if you contribute zero from your paycheck.  

I think you really need to figure out what happened here--what you were led to believe, what changed.  Have you asked the benefits office at your (former?) employer for clarification?  I think we could be more helpful if you were to do that and relay to us what they tell you.

My fear is that you had the option of a 403b with an employer match, but you never completed setting up the account so you got none of that benefit.  In that case, take it as a lesson learned and a motivator to research how retirement savings work these days.  It is a shame that Americans are expected to take so many actions, make so many decisions and navigate so many sales pitches when saving for retirement, but that is the current reality: if you don't learn about saving for retirement, you will lose out.

 

PS:  After posting this I noticed that you wrote "My employer states I was dropped because I never enrolled."  This seems consistent with my fear outlined above.  

I DID enroll. I have a written letter from the company stating I enrolled. This is not a paper work issue. The issue is that my school changed my enrollment 6 months later to 0 percent without my knowledge. Is this legal? It sounds like noone knows. Whether they contributed or not - whatever - they never put my money in this account. WHY - is a great question. I think they have massive turn over and made a clerical error. My employer says I was never enrolled. That is false. I have proof that I was. 

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It's unfortunate that you didn't get enrolled when you thought you did.  I don't mean to be blunt, but you should have checked your pay stub.  This sounds like it was a 4% match of your contribution, but you never contributed any money, so there was nothing for them to match.  Maybe I am misunderstanding.

 

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10 hours ago, chocklita said:

I DID enroll. I have a written letter from the company stating I enrolled. This is not a paper work issue. The issue is that my school changed my enrollment 6 months later to 0 percent without my knowledge. Is this legal? It sounds like noone knows. Whether they contributed or not - whatever - they never put my money in this account. WHY - is a great question. I think they have massive turn over and made a clerical error. My employer says I was never enrolled. That is false. I have proof that I was. 

Ok, you have a letter from the company that you were enrolled. What did they say?

If you already talked to the company, your district and your rep about this letter and no one knows what happened, then talk to an attorney to answer your question about legality. Hint, you have to prove that you were harmed in some way. 

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