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Why keep your pay statements, and how

Recently My Dollar Plan told the story of a family member whose employer, in her early years on the job, neglected to withhold her retirement contributions. Fifteen years on, the accounting department noticed. In the discussion that ensued, she offered to contribute the unpaid amount but was told all would be fine, not to worry. Now, after thirty years in the salt mine, she retires, thinking indeed all is fine. But noooo…now they tell her that her retirement fund is not funded adequately to support her in her dotage.

This is big. Not just for the poor soul who’s looking at a lengthy struggle over this and the possibility of an impoverished retirement, but for all of us. The trend to outsource payroll to companies for whom employees are just so many numbers—or, if living entities at all, sheep to be sheared—distances workers from employers who have to look them in the eye. So does the increasing use of electronic systems that function more or less unobserved by human beings. The potential for error is much higher, and the potential for errors never to be noticed grows by the day.

A year or so ago, the Great Desert University turned over its payroll (and just about everything else having to do with sheepherding personnel management) to PeopleSoft. A huge fiasco ensued. Supposedly by the turn of the year everything was straightened out, and on the surface things have appeared to be running smoothly ever since.

Then we had the last round of layoffs. A number of the most recent cannees had worked in maintenance and support jobs for decades.

One benefit of working for Our Great State is that your sick leave hours accrue separately from vacation hours. Over the years, if you’re lucky enough to stay healthy or you come to work when you’re ill, a lot of sick leave hours pile up. After you reach 500 hours, the state will pay you 30 percent of your hourly pay rate as severance pay when you leave employment. Stash 1,000 hours, and that rate jumps to 50 percent of hourly pay. As you can imagine, this adds up nicely. At the moment, for example, if GDU lays me off today, OGS will owe me $16,500.

When the most recent RIFed workers applied to HR for payment reflecting their accrued unused sick leave hours, they were told they had none. PeopleSoft had no record of their sick leave balances. None.

Well. Of course, in the absence of their entire archive of back pay stubs, there’s no way for any of the laid-off workers to prove how much sick leave they earned, how much they had used, and how much remained for the state to pay.

This is why it’s crucial to keep copies of every pay stub or statement you get. If your pay statements are posted online instead of being delivered to you in hard copy, print them out and keep them in a fire-proof file cabinet. You should also be able to copy them to disk as PDFs, a good back-up, especially if you have electronic storage space somewhere other than at your house.

Keep these permanently. Never throw them away.

Not only that, but you should check every paycheck carefully for accuracy and completeness. During the Great PeopleSoft Fiasco, I received eight paychecks whose gross or net income figures were wrong. Twice, PeopleSoft failed to withhold my contribution to my retirement fund, and three times it failed to make GDU’s contribution. When accounting for my vacation hours disappeared, I was informed that—after 15 years of working for this fine institution—I was ineligible for vacation time. When, after weeks of squawking on my part, they decided to fix this, they got the figures wrong time after time after time. They got my sick leave figures wrong, they got my federal withholding wrong. And finally, come January, they got my W-2 wrong, too.

How do I know? Because when I realized what a mess they were making of things, I started keeping track of each item on my paycheck in an Excel spreadsheet:121008payrollerrorsThese figures, of which you see only a small part, came in mighty handy every time I had to send yet another written complaint to HR and to the Dean’s office over the mess PeopleSoft was making of my pay.

I knew the W-2 was wrong and that the error was in my favor, but not being an accountant, I couldn’t prove it and had no idea how to identify the errors. On the advice of my lawyer, I decided to let it go; it’s the employer’s responsibility to get the tax withholding right, and I was assured that I would have no liability if an IRS audit (which GDU and PeopleSoft richly deserved) showed irregularities in the W-2.

But…the discovery that the university was blithely distributing W-2’s that PeopleSoft knew to be in error (we actually were told this, and told we should calculate the correct figures ourselves!) led me to realize I’d better do more in Quicken than just enter my net pay. Starting on January 1, I began to enter a split entry for each paycheck, showing the gross payment less each deduction:121008splitentry

This, of course, is a gigantic pain in the buns that adds extra work time to my bookkeeping. However, I suspect it will be worth it.

For one thing, I discovered another error in a paycheck, which PeopleSoft never could account for. And for another, my annual Quicken category report will print out totals for each of the items shown in the split entry, making it easy for my tax lawyer to compare the actual income, deduction, and withholding figures with whatever appears on next January’s W-2.

Those are short-term issues. But the long-term issues could add up to something much more significant.

If Dollar Plan’s relative and GDU’s RIFed workers had kept records like these, they’d have a potent weapon in their fight with their employers. That would make it well worth the extra time and effort it takes to review your paycheck carefully and keep a running record of everything that has to do with it.

4 thoughts on “Why keep your pay statements, and how”

  1. thank you SO MUCH for this heads up. I have been keeping my paystubs for tax purposes – never realized I should keep them forever. Will do. I’m retiring – maybe – in twenty years.

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