Cancellation of retirement benefits without notification

Good afternoon. I work for a company that employs 6 people (including the President and VP). They've provided me with a SEP retirement plan and a check at the end of 2008 and in Jan 2009 they presented our employees with the information for transferring our retirement benefits to a 401k. Nothing ever happened and in August I brought up the retirement plans again in a meeting. They advised that "due to economic times" they would not be persuing a 401K until they could afford it. My question is: Can they just ignore the retirement benefits and not provide us with the promised benefits without notification? We're getting towards the end of 2009 and if the 401k was not actively persued by the company as promised, don't they still have to provide us with the SEP IRA?
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Answers (1)

Jeffrey S. Ashendorf

Jeffrey S. Ashendorf

Contributor Level 4
Unfortunately, no.
Without getting too technical, a SEP-IRA is not subject to most of the rules that govern other types of plans ("qualified" plans); that's actually the main reason why employers use them. But one of those requirements is the need to give employees advance notification of certain changes.
I"ll agree, it's not very nice, but , absent some other commitment, they have no obligation to keep the plan up.
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