401K deduction from my payroll

[PatD2009]

What is the name of your state (only U.S. law)? Ohio - My recent employer sent me a lot of emails related to 401K and since I didn't want to participate, I stopped opening or reading them. My last check had a payroll deduction for 2% and it is for 401K. When I told them that I had not filled out anything related to a 401K, they said that it was assumed I would participate and failure to return documents saying I rejected the plan program, gave them the right to deduct at the lowest level. i.e. 2%. When I told them verbally that I didn't want in the plan and wanted my money back, they also said that I would need to fill out a series of lengthy forms to get out of the program and would only receive back 20% of my deduction since this was the amount I was currently vested . This also means that I have to fill out additional paperwork to get my money refunded via a rollover pay out and that only happens twice annually. I thought 401K was a voluntary program and that my signature on a voluntary program was required before a deduction or inclusion in such a plan could take place. Is it legal to make a payroll deduction from a voluntary program without my signature or consent?What is the name of your state (only U.S. law)?

 

[Zigner]

Did the company match any of the contribution?

 

[PatD2009]

401K deduction

I would assume so, but the real question is did they have the legal right to include me in the 401K program in the first place. I didn't sign anything saying I wanted to participate. All I want them to do is return the initial deduction they made in error. What does the law say regarding what constitutes legal authority to include me in this program?

 

[pattytx]

I thought 401K was a voluntary program and that my signature on a voluntary program was required before a deduction or inclusion in such a plan could take place. Is it legal to make a payroll deduction from a voluntary program without my signature or consent?

Not necessarily. Passive enrollment IS legal. You would have to check your Summary Plan Document. And don't ignore mailings.

 

[PatD2009]

401K deduction

I live in OHIO.

 

[eerelations]

Your state isn't required for this particular issue. Read pattytx's response.

And I'm amazed that you don't read all of your boss's emails! Not reading some of them just because you find the subject boring is a real CLM!!!

 

[cbg]

A few years ago, a new law went into effect making it legal for an employer to enroll an employee in a 401k plan unless the employee specifically signed something saying they did not wish to participate. If your employer's plan document has been set up this way, then by disregarding the mailings you may well have inadvertantly signed up, or at least failed to meet the deadline to not sign up, and your employer added you to the plan based on the plan rules. This is a Federal ruling and the state of Ohio did nothing to make it go away.

 

[Country Living]

CBG/Patty/EE, please confirm any amount the OP receives from the 401K would be considered a withdrawal and subject to the 10% early withdrawal penalty as well as federal taxes.

On a separate note - I had an employee who refused to participate in the company's 401K plan (with up to a 6% matching - it's now 8%) just because she was obstinate and found the whole process boring. Fast forward several years and her co-workers are talking about the huge amounts they have in their 401K (this was prior to 2008) and how they would be able to retire in relative comfort at a reasonably young age. The employee finally realized she had blown her future. She lost 20 years of contributions, matching funds, and the time value of money.

 

[cbg]

CBG/Patty/EE, please confirm any amount the OP receives from the 401K would be considered a withdrawal and subject to the 10% early withdrawal penalty as well as federal taxes.

You are correct.

 

[pattytx]

CBG/Patty/EE, please confirm any amount the OP receives from the 401K would be considered a withdrawal and subject to the 10% early withdrawal penalty as well as federal taxes.

You are correct.

Boy, am I glad you got to this first.

 

[Zigner]

Unless said amounts are properly placed in to another approved plan...

 

[Country Living]

Unless said amounts are properly placed in to another approved plan...

LOL... OK.... good one. I can see how the couple of dollars we're talking about will start that Roth off on the right track.

The thing I find most interesting is she is blaming the employer for putting her in this situation and she's upset because she has to fill out paperwork to stop future contributions. It was a single signature on the front end to not even contribute. That would have required her to read the emails.

I wonder if the OP's issue is believing she does not have the money to save or not wanting the employer to tell her what to do. If I was her employer, I would be wondering what else I'm asking her to do that she's ignoring.

 

[BTLFLA]

Hi I am new here

But, I am having the same trouble with my wifes company and did some research before calling them. I will see how it turns out Wed.

PS we did not recieve any info about opting out either, that is also suppose to be an issue. Shouldnt matter though.

This is the link to where I found this info

Laiken Associates, Inc.

This is what I think may help you and also our situation. to quote this link.

Employees that have been swept into a plan without making an affirmative election to do so may make withdrawals of automatic deferrals within 90 days of the first contribution without a penalty. By doing so, they forfeit any employer-provided matching contributions;


so you would get your own money back but have to pay taxes on it. Fine with me.