My Retirement Account Becomes A Financial Drama

Posted on February 13, 2011 6 Comments

Since getting my finances in order, my retirement account has been a star performer. I’ve written about it, tracked its performance, rolled over a 401k, gone to retirement presentations, met with a retirement planner, and for more than seven years have fostered its growth. So imagine my surprise when earlier this week, my retirement account story turned from romance to drama: on Tuesday while looking up the status of my flex spending account, I randomly noticed that my retirement contribution for January was $0.00. A far cry from my usual ten percent. What happened?

Before I share the details of this week’s disaster, you should know that my employer has an AMAZING retirement plan. It’s one of the reasons I took this job. The organization automatically contributes five percent to an employee’s retirement fund, whether the employee is contributing or not (I’ll call this the “automatic option”). Then, on top of that automatic five percent, my employer also matches contributions up to five percent (the “employer match option”). Which means that if I contribute five percent of my salary (“my contribution”), my employer contributes ten percent  via the automatic option and the employer match option. However, employees are not eligible for any employer contributions until after completing one year of service.

I started contributing ten percent to my retirement (my contribution) on day one at this job, knowing that any employer contributions would not kick in until after my first year. Since then, I’ve only looked at it sporadically and always only through the web site of the company that manages the account vs. through my human resources (HR) intranet.

Apparently, according to HR, I received an e-mail in September notifying me that I needed to manually change my contribution election within our intranet site in order to receive the employer match option. (I needed to do nothing to get the automatic option.) I do not recall ever seeing that e-mail. It’s possible that it went into the trash. I did not manually change my election  within our HR system – and so, as of September 1, I was still saving ten percent of my income to my retirement, but all ten percent was coded as a “voluntary unmatch” contribution. (Is this all still making sense?)

Basically, since I missed the September email, I did not manually click a button to “turn on” the employer match contribution of five percent. I thought it would automatically kick in, just as the “automatic” five percent did. In our new employee orientation, the powerpoint and documentation we received said “contributions start” on your one year anniversary. Nothing in orientation, nor on the web site, nor in our open enrollment literature said anything about manually updating our benefits database.

Which brings me to a point about open enrollment. I missed it. And since I had posted a big to-do about remembering to make open enrollment deadlines on this blog, I was kind of embarrassed to admit here that I had missed the deadline. (I wrote down the wrong frickin’ day in my calendar.) I was OK, though, because I read somewhere that all my elections from 2010 would remain the same if I missed the cutoff date. That ended up not being true, as I found out last week when I tried to use my flex spending account – my health care flex spending account rolled over to $0.00. I was totally bummed about that so I went into the system to see what other elections I waived by not participating in open enrollment. That’s where I discovered that my retirement contribution had gone to $0.00 as well.

I mention this because had I gone through the system to make changes to my contribution in October, I would have updated my profile and started qualifying for my employer match option months ago.  Instead, I missed an opportunity to inspect my contributions, and so, my entire contribution stayed in the  ”voluntary unmatch” category for 2011.

As it turns out, because of some complicated IT issue, since I did not manually update my contribution to reflect the right codes online in September, nor during open enrollment in October, the HR system made an error and reset my retirement contribution to zero dollars. And here I was in February, looking at my January paycheck and learning about it for the first time. I was confused and angry.

I called HR and through many emails over several days, they figured out the system error. I went into our intranet, clicked on the correct options, and worked with HR on a fix for February so that my contribution from last month is made as soon as possible. (Well, everything but the shares I would have purchased in January – I’m just purchasing them in February. We figured out that the loss will be a matter of ~$10 or less.) Since it was technically my fault for not updating the system, I’m fine with the solution HR came up with to ensure my January savings are put into my retirement account.

What I am not fine with, though, is that I missed out on the employer match option for five months because I didn’t check a box in a database, especially since I didn’t know I needed to manually update the database/system. I’m thinking of writing a letter to HR requesting that my employer make the payments for September through January. It doesn’t sit right with me that the purpose of offering the option is to reward employees who are saving, yet because I didn’t check a box I can’t get the money. I was saving. I was eligible. And I wasn’t aware I needed to click a box. Yes, it is my fault for not reading the e-mail. But I never saw the email. And no one from HR ever followed up with me to tell me what I needed to do. Therefore, I think the employer should consider reimbursing me. I’ll let you know what I hear back after I write the letter.

It’s just amazing to me what I have missed out on and how many headaches have been caused because I didn’t keep up with my paperwork. Get one date wrong on your calendar, miss one e-mail, and you can miss out on thousands of dollars, tax benefits, and unrealized income. In one day I went from feeling really good about my retirement to feeling like a total dunce. It’s a blow to my financial confidence, and a reality check for the future. No matter how thorough I am about making investments, if I don’t keep up with maintenance, things can go wrong.

So I’m going to set up reminders in my Outlook calendar to check my incoming pay stubs (which are all electronic, probably the reason I wasn’t checking them in the first place), check for changes to my contributions annually, and read every email and letter from HR thoroughly. I should have been doing this in the first place, but my previous employer did everything automatically so I never had to do anything but update my contributions at my own discretion. I will take this as a lesson learned – maintain a robust relationship with all your accounts to keep them from turning into a financial drama or a comedy of errors.  Hopefully I can get back on good terms with my retirement accounts as soon as possible.

Category: Money
   Tags: Retirement

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