Can boss stop 401(k) then blame IRS?

A version of this Help Wanted column appeared in Newsday Sept. 21, 2008.

DEAR CARRIE: Our employer discontinued our 401(k) plan four years ago but promised to reinstate it. Employees have asked the company repeatedly to bring back the fund, but each time the owner says the Internal Revenue Service bars him from offering a retirement plan because he owes back taxes. Can you tell me if this is true? I simply don't believe it. -- Office Myth?

DEAR OFFICE: I'm surprised your boss hasn't grown a Pinocchio nose, because the information isn't true, according to the IRS.

"We are not aware of an IRS collection policy that says an employer cannot have an employee retirement plan while back taxes are owed," the spokesman said.

Private retirement plans are covered, in part, by guidelines and laws in the Internal Revenue Code, which the IRS administers. Private retirement plans are also governed by the Employee Retirement Income Security Act, which is administered by the U.S. Labor Department.

A Labor Department spokeswoman said the scenario you describe wouldn't prevent your company from setting up a retirement plan. So the ball is in your company's court.

A version of this Help Wanted column appeared in Newsday June 15, 2008

DEAR CARRIE: After I lost my job, I applied for unemployment benefits. To my surprise, I was initially denied benefits because the state Labor Department said it had no record of my employment. I thought perhaps the department didn't have my new address. So I called.

Well, the state had no record of me because since 2005 my boss never forwarded to the IRS payroll taxes it took out of my check for such things as Medicare and Social Security and income taxes.

After repeated calls to the department over two weeks, I established, via my W-2 statements, that I had worked, and I began to receive unemployment benefits. And I notified the Internal Revenue Service about what happened. My question is, how long can companies legally hold onto taxes after they deduct them from employees' pay? -- Vanishing Act

DEAR VANISHING: The IRS has two schedules -- semiweekly and monthly -- for determining when the taxes deducted from employees checks have to be deposited. Companies choose a deposit schedule based on a tax liability reported earlier to the IRS.

That's the simple version of a complex regulation. Your former employer should know about the schedule. But just in case the company doesn't have a clue and you're feeling magnanimous, direct the managers to irs.gov/publications/p15 /ar02.html탢391.(Click here to connect.)

A version of this Help Wanted column appeared in Newsday, June 29, 2008.

DEAR READERS: A local accountant has responded with more advice for "Vanishing Act," the employee I wrote about two weeks ago who had trouble collecting unemployment benefits because his boss deducted taxes from the worker's check but didn't forward them to the IRS. Because of that, the state Labor Department had no record of the employee and initially denied him benefits. He eventually established his work record through W-2s.

The worker should also contact the Social Security Administration, said Ruth Sattig Betz, a certified public accountant in Farmingdale.

If the employer did not report or pay the payroll taxes, such as Social Security or Medicare, chances are the W-2 statements the worker received were never filed with Social Security, she said.

"SSA records should be corrected, if necessary, because any omissions could affect the amount of Social Security 'Vanishing Act' collects in the future," she said.

Carrie Mason-Draffen welcomes workplace questions, though she cannot respond to every query. Some may be edited for length and clarity. Contact her with your questions at 631-843-2450, or e-mail her at carrie.draffen@newsday.com. Send a letter to Dear Help Wanted, Business Desk, Newsday, 235 Pinelawn Rd., Melville, NY 11747-4250. Your name and number won't be published.