Navigating 401k Contributions: Can We Correct Missing Overtime Deductions?

Does anyone know: I have a CBA at one location that states 401k should come out of gross earnings; however, our 401k was not set up to take contributions from overtime. I know that if the situation were reversed - if the plan stated gross earnings and we weren't taking from overtime - the company would be able to fund the missed contributions and earnings. Can we do the same in this situation? Don't know the DOL regs.... Would it just be a self-correct?

Hi,

This was a total bouncer. Can you please, for the benefit of people like me, explain what a 401(k) is all about?

Regards,
Soumya Shankar

It's the US Retirement Plan - employees are allowed a certain amount of money every year to go into this retirement plan, which consists of pre-tax dollars. Some companies match a certain percentage, while others don't. The advantage is that employees are tax-sheltered from this amount and the percentage on the growth of the funds until they reach 65, when they can start drawing upon them. That is the 401K in a nutshell.

Rekha

Hi Rekha,

Thanks for the info. Could you please provide me with the following details:

1. Why is it called '401k'?
2. Is it implemented only in the U.S.?
3. Where is that amount deposited? What happens to it in case the employee quits or passes away?
4. Is it restricted to any particular industry?

Regards,
Soumya Shankar

1. Why is called '401k'?

A 401k plan is a retirement plan sponsored by employers. Employees may choose to have a portion of their salary deferred to any of the 401k investment choices selected by the employer. The employer may also contribute to the employee'sa 401k by matching a portion of the investment (for example, $.50 for every $1.00 the employee invests). The investments to which money is deferred may include stocks, bonds, money market funds, and company stocks. Monies deferred into the 401k are allowed to grow tax-free, and these monies are subtracted from the employee'sa taxable income. The maximum amount

2. Is it implemented only in the U.S? same concept is there in Canada and Europe - RRSP Canada

3. Where is that amount deposited? What happens to it just incase the employee quits or expires? a 401K plan in administered through various vendors - financial groups - such as vanguard, ing, sunlife, etc... if an ee is terminated then she has a X amount of days I believe its 60 days that they have to roll it over into an individual plan.

4. Is it restricted to any particular industry? nope most industries offer this to my knowledge to ee's it is a benefit if company matches a %

Unless the 401(k) provision is a recent addition to the CBA, my question is: How was it handled in the past? If it is a new provision, contact the Company Negotiator for clarification on how it should be administered.

Without further information, I have to agree with rekadaniel - Only straight-time earnings are eligible for inclusion in a 401(k).