Why do I have to pay back money put into my 401k?

Question

My manager did not notify HR when I went on medical leave, so payroll continued to cut regular paychecks and deposit them into my 401k and bank accounts.
Well, I quit my job, and then HR started harassing me about paying the company back. So I wrote them a check for the wages paid me during my leave.
Two months later, I get a letter from the company, saying I owe them for what they put into my 401k, including the company match amount. WHY?
If I withdraw that money, I have to pay a penalty. If I take the money from my personal account, then it's like they're forcing me to make 401k contributions.
Can they legally force me to do this?
Serious answers only, please - "gamers" will be reported.

Answer 1

This was mistake on their side. There's no illegal wrongdoing whatsoever on your side.

I had a similar situation with the FICA contributions, although the leave was for a different purpose. The company wanted a refund, and my friend, who happens to be an attorney, just told me if I did not specifically arrange any wrongdoing, then there's no fault in my part.

You're right to pay the salary checks back, but 401k is their problem, tell them you won't be paying it, and they're welcome to use any legal recourse. You can bet they will just take it as a writeoff.

Answer 2

I'm not entirely sure of the circumstances around this, and the details aren't quite enough for me to understand.
What I Think you need to do is one or both of two things.
First, contact the fund manager for your 401(k) plan. You should be getting statements from them or have a company name you can look up online. Discuss this situation with them, and make sure you provide them with all the info. Also, make sure to write down names of everyone you talk with there. I am suspecting for a situation like this, you may be able to cut the money from the account with the help of the fund manager, without penalty to you.
Second, contact a lawyer knowledgeable in financial situations or contact your state's local consumer protection agency/bureau for guidance. This was not your mistake, and you should not have to pay for it. However, legally, your employer may be within their rights; I am not sure. A legally-savvy person will be able to properly advise what your responsibilities are here, and your rights. You need legal help, because if you decide to tell your company you are keeping the money and they will have to deal with the problem, they will bring their lawyers down upon you. Be prepared.
As for "why" your company wants the money back... for the same reason they wanted you to pay back your wages. They paid the money out, if erroneously. The problem is you paid the wages back, so now they're going to use that to their advantage. They will say, "hey, you admitted we overpaid you when you sent us a check. Well guess what, since you admitted to it, own up to the full amount we paid out to your benefit, not just wages."
I also can't help but feel your manager should be held responsible to some degree for this.
Good luck.

Answer 3

Legally, you did not have to pay back the wages because it was due to the company's error but I believe it is the ethical thing to do. I assume you paid back the net pay and not the gross? I doubt that you are legally required to repay for the 401k error also, but you would need an attorney to help with that. But you did receive the 401k and match amount in your account in error, right? So I believe that ethically, it wouldn't be that bad to pay them back.

Answer 4

I am not sure as to why they say you owe them money. Else you did not have a provision in you contract to receive pay while on leave. Then the money they deposited into your 401k is not yours. Normally the only time you have to pay money back is when you have recieve it in error. Contact a lawyer to find out what your rights are and also contact the labor board to see if this is legal>

Answer 5

If the money is in your 401(k) account, they can't and when I say can't I mean can't legally force you to give it back. One because you do not deposit in your account, they do. And when you take your money out, under no circumstance can they withhold the check or cash it to get their money back, if they do that you can sue them.