Jul 25, 2026
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Add us on GoogleSaving for retirement is critical to building a secure future, and workplace retirement plans are key to making that process easier.
While only around 56% of workers participate in employer-provided plans, these plans typically offer generous tax breaks and sometimes employer matching contributions.
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What happens, though, if you try to sign up for a workplace plan and your employer ends up not following through? Let’s pretend, for example, that Xavier got hired and filled out all the paperwork to enroll in his company plan. The only problem is, the company never processed the request.
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Now, it’s been a year. Xavier missed out on his employer matching contributions, plus the returns he’d have made. And he’s wondering who has to eat the loss. Will his employer need to give him the money he missed, or is Xavier going to be set back in his saving efforts?
Employers have to make things right when they mess up retirements
Fortunately, Xavier isn’t just going to lose out on the missed contributions. His employer made the mistake, and the law provides strong protections for workers to make sure workplace retirement plans are handled properly.
“A worker in this spot is not simply out of luck,” Aaron Hall, a business attorney in Minnesota, told Moneywise. “Being left out of a workplace retirement plan is one of the most common mistakes employers make, and federal law treats it as the employer’s problem to fix, not the worker’s loss to absorb.”Hall explained that the majority of private-sector retirement plans are covered by the Employee Retirement Income Security Act of 1974 (ERISA), a federal law that applies nationwide. ERISA puts the burden on the employer to make a worker whole when there’s a problem with missed contributions, and the IRS actually administers a formal correction process for this situation.
According to the IRS guidance, a failure to deposit a worker’s contributions must be corrected by making a late deposit of the funds.
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How much can Xavier get from his employer?
Xavier didn’t just miss out on the contributions he signed up to have taken from his paycheck. He also lost employer matching contributions and gains that the money would have made. So, the big question is, how much money does the company have to give him now to make up for its mistake?
“Make whole does not always mean a dollar-for-dollar refund of everything the worker would have set aside,” Hall explained. He said typically an employer who missed contributions must restore:
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- The full amount of matching contributions the employer would have put in
- The lost earnings due to the delay, calculated based on IRS rules
- A portion of the employee’s missed contributions. This is “often half, rather than the entire amount, on the theory that the worker still received those dollars as wages and could have saved them elsewhere.
Hall said Xavier should be able to get the money by making a request in writing to HR or the plan administrator. If the employer doesn’t comply, Xavier can make a complaint to the U.S. Department of Labor or call an employment benefits attorney.
Of course, this is all contingent upon the fact that Xavier missed out on 401(k) contributions. If his employer offered a set guaranteed monthly benefit with the payout based on years of service, the employer would still need to make it right, but that would involve a different process.
“A traditional pension that promises a set monthly benefit works differently from a 401(k),” said Hall. “There, the fix is for the employer to restore the retirement credit the worker should have earned, rather than to catch up cash contributions.”
Either way, Hall advises that Xavier start by alerting HR. Since ERISA violations are taken seriously, this will likely be enough to get the ball rolling and get Xavier’s missing money into his retirement plan where it belongs.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
