Personal Finance

I just discovered errors in my 401(k) due to HR mistakes — is this common?

Kristin Hitchcock

Published: December 13, 2024 11:05 am

Taking a closer look at your finances may be time-consuming, but as one Reddit post recently showed, it’s extremely important! The poser’s vigilance with their 401(k) uncovered an error that had a sweeping impact on their account and the accounts of their coworkers. 

24/7 Wall St. Key Points

• It’s vital to occasionally review your paychecks, benefits, and retirement accounts. These small steps can potentially save you thousands of dollars. 
• This Reddit post highlights just how important it is to pay attention to your retirement accounts, even if you feel like you’re well on track for retirement. You can stock too much into your 401(k), but vigilance is still important. 
• Also: Are You On Track to Retire? Take This Quiz and Find Out ^(Sponsored)

Here’s what the Redditor had to say and what we can learn from their vigilance.

A Lesson in Financial Vigilance

The Redditor works at a company with around 600 employees and regularly checks their 401(k) contributions and matches “just in case.” At first, they were just taking a quick look at their annual transactions. However, when they noticed an error, the problem quickly ballooned into a company-wide investigation. 

Two years after noticing an unexplained $12.50 fee, they discovered a $153.95 negative company match in their 401(k). At first, HR dismissed this anomaly, but it turned out to be part of a larger issue that affected every employee’s retirement account. 

The $92,000 Discovery

After an investigation, they discovered a payroll system error. A miscalculated “true-up” adjustment had negatively impacted the 401(k) accounts of all 600 employees. Their persistence led to the recovery of approximately $92,000 across the company. 

That doesn’t account for all the gains that money would have made if invested, either. Compound interest means that this is a much larger problem than just a few hundred dollars. 

Why This Matters

This story is an example of just how important financial awareness is:

• Errors Happen: Even well-developed systems and trusted HR departments can make mistakes.
• Compound Interest Amplifies Losses: A small difference in contributions today can add up to a huge difference decades later. 
• Advocacy Matters: It’s important to speak up and uncover issues that may be impacting more people than just yourself. 

The Redditor’s advice was rather simple: review your paychecks, benefits, and retirement accounts. You never know when a mistake has been made, and fixing those mistakes sooner rather than later is important!