Burlington College failed to deposit employee contributions into retirement accounts over the course of 16 weeks this summer, documents show.
The school did not set aside withholding from wages into retirement accounts, nor did it contribute a 7 percent match it promised to employees.
Employees learned of the problem Thursday when they received letters from the retirement fund TIAA-CREF dated Aug. 15. The last contribution the college made to employee accounts was June 9 for the April 25 pay period, according to the financial services company. Burlington College did not notify employees until Monday.
Christine Plunkett, president of Burlington College, said the failure to deposit the money was a mistake.
In an email to staff Monday, Plunkett said she discovered the “inadvertent oversight” last week during the course of a “regular internal review.” Staff were very busy this summer, “juggling many balls,” she said.
Plunkett called the error a “grave concern.” It is not related to the school’s financial struggles, she said.
“It did not relate to cash flow management, we’re well aware these are employee dollars,” she said.
Future Planning Associates, the retirement administrator for the college, is calculating the interest employees would have earned over the summer, Plunkett said. The interest will be deposited into employees accounts as soon as possible, she said.
Carol Hamilton, deputy regional director for the Employee Benefits Security Administration at the U.S. Department of Labor, says that as a general rule small companies must make deposits to retirement accounts as soon as possible or within seven days. Delinquent contributions are one of the biggest problems associated with 401(k) and 403(b) plans, Hamilton said.
“I am well aware of the legal obligations to remit those funds in a timely manner,” Plunkett said in the email.
Employee contributions to the 403(b) accounts were fully paid as of Friday, Plunkett said. As a “gesture of goodwill,” she said the college planned to deposit the employer contributions Monday morning, even though the school had until March 2015 to make the employer match payments.
Plunkett said future retirements will be made within the federally mandated time period after each payroll cycle. The college is looking into automatic remittance of the contributions in future.
“I apologize for any inconvenience, and particularly any distress this delay caused you,” Plunkett wrote in the email to staff.
According to an employee of the college, the funds did not show up in his retirement account by Monday.
Burlington College’s retirement plan allows full- and part-time employees (18.75 hours or more) to contribute up to 20 percent of their salaries. The college kicks in 7 percent of the gross salary of any employee who contributes at least 4 percent of his salary, according to June 30, 2013, financial statements from the college.
A recent audit questioned the college’s viability and raised concerns over its ability to pay its bills after acquiring a new campus from the Roman Catholic Diocese.