FORCED 401 K

SOn in law called yesterday with a question."DOES
a part time worker have to be forced into a 401 K plan"? My daughter works 2 jobs in the health care related field (helping the aged) Only a few hr per week, Now the outfit she works part time for is demanding she takes out a 401 K. She does have a 401 K where she works full time at the hospital. My son looked it up (somewhat) on the internet but came away mostly empty. I always thought that taking out a 401 K plan was VOLENTARY. MABY SOME ONE ON HERE KNOWS THE RIGHT ANSWER . REguards LOU.

A 401K was not mandatory at the factory where I used to work, but I've been away from there for several years now. I doubt very much that the legal status has changed though.

1 question, did you get that from her or her company? Maybe they were encouraging her to take out a 401 so she could "keep" more of her wages. No one can make you invest and if that is actually the case its probably time to move onas they are probable cooking their books

You, your daughter or SiL might want to take a little closer look at what's actually going on.

No one can require you to invest your own money in anything like a 401k.

Some companies (generous ones, actually) will contribute something small (1% of base pay or somthing similar) to one whether you choose to add to it or not. In that case, they might require you to fill out a form selecting how they should invest it, or to waive and let them invest it as they see fit. But, in that instance, yes, there will be a 401k, but there's none of the employee's money in it. If that's the case, I wouldn't fight it. They're not going to increase the wage by the amount that they would put into the 401k. It's hard to argue against retirement savings, and why would you turn down free money? There's typically a vesting period that would require something like five years for your daughter to ulitimaely be entitled to be able to ultimattelly draw on the plan. In those cases, if she leaves sooner, their contibutions vanish as if they were never there.

Plans like that are usually pretty generous, in that, if your daughter should decide at some point to contribute to it, the cmoppany will match her contribution.

So no, they can't force her to contribute, but it might be part of their benefit package that they contribute in a small way to one whether she does or not. Like I say, if that's the case, it's free money. Fill out their form and take it!

It used to be that there was a "safe harbor" issue in 401k plans - in that upper management's ability to contribute to the plan may be limited if there is inadequate participation at lower levels in the organization. I assume that this is still the case.

She needs to ask for a copy of the plan documents from the employer. Many companies have switched to automatic enrollment, in which the employee must specifically specify (in writing) they do not want to participate. This is legal.

401k"s are really and "add on" CODA(cash or deferral arrangement) to a Profit Sharing Plan.

Most employers today do not give any profit sharing contributions to employees, because this is a voluntary contribution on their part.

Like others have said, she may be given a "small" profit sharing amount of money by her company----but on the 401k end of the plan, she cannot be "forced" into putting her own money into the 401k plan.

As to what was mentioned before, most companies offer a company match to whatever your daughter puts into the 401k plan. This is "free money" and a person would be foolish not to put into the 401k at least up to the company match amount.

However, you may be surprised to know there are
a lot of folks that have the company "match" available to them and still do not contribute...go figure that....

Tim

I don't think they can demand you join but the might BUT they can not make you contribute your own cash into one. I kinda wonder if companies even have to offer it to part time workers. Most don't want to bother with them as they are obligated to maintain the account as long as they are in business so it can be an administrative pain in the neck.

I would suspect 2 things. One the management doesn't know the law(s) which is VERY VERY common in large and small companies OR 2, they need higher participation to get a better rate from the providers for service fees ect ect. or some other perk for the management to get to a certain level of investments. Otherwise its more work for the HR department to deal with them.

There was some interesting street gossip a short time ago concerning such retirement plans. The link is no longer valid but perhaps a person could find the article elsewhere as well.

---From a forum post with the title: Government after your 401K/IRA

They want to force you to convert them to treasury bills with the promise they will pay you an annuity when you retire. This is theft of private property pure and simple. They are trying to prop up their scandalous borrowing by making YOU lend them money to cover it. This plan is another ponzi scheme just like Social Security.

http://www.businessweek.com/news/201...-ici-says.html
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Guess I should go to my local library and look through Businessweek to read about this.

I just became able to do our companies 401K and they will match up to 6%

I am kinda torn on this as it takes every penny I make to pay the bills. The wife just cut her hours.
And the other troubling thing is that the plans offered none of them are guarenteed. No FDIC or anything like that. So with this screwed up economy what I put in could be gone ! The company only does there part at the end of the year. This plan is with Nationwide. I wonder if they are any good and if they will be around ?

As others have said its free money if the employer is doing any matching. Also im sure now days you opt out rather than sign up to join. I would have someone look at the investment options they offer before deciding. If you end up with a lot of stock in some private company I would pass. I would look for a government treasury option for safety. Usually if you leave the company after a short time they eventually cash you out at their option.