401(k) and Fringe Benefits

[amyaphi]

What is the name of your state? MS (but the company I work for is based in CA with another corporate office in VA)

Currently, I receive my base pay and and a fringe benefit ($2-3/hr). Yesterday, I received a letter from our company stating that all employee's fringe benefits "will now be deposited directly into your 401(k) account." The letter further states that if I do not have a 401(k) account through the company (which I do not and have no need for) then one "needs to be established."

My main questions are: Can they require me to put portions of my pay into their sponsored 401(k) account? Are fringe benefits regarded differently than normal salary pay? Do they have to provide some sort of "opt out" option? I am very upset that it seems like I am being told how to invest my money. I have no desire (or need) for the 401(k) that they are offering. I have other investments for retirement and this small amount of money is not worth it to me.

Any help would be greatly appreciated.

Thank you.

 

[cbg]

"Fringe" benefits are usually things like vacation pay and health insurance. I don't understand what this so-called fringe benefit is for. What is its purpose and what qualifies you to receive it?

It may be semantics. On the other hand, it may make a difference to the answer.

 

[amyaphi]

The "fringe benefits" are for health insurance.

 

[cbg]

So, they have been providing you with a couple dollars an hour towards health insurance, and now they are mandating that it go into a 401k instead? Am I understanding correctly? (just so I don't answer the wrong question).

 

[amyaphi]

Yes. However, if the medical premiums paid are under the FB, the difference will be deposited into the account.

 

[cbg]

I just checked with a colleague (okay, she's my boss ) who is the most knowledgeable person I know about 401ks - this is one of the biggest and most prestigious law firms in the US (I can think of at least one case they handled I guarantee you know about) and the ERISA attorneys come down to get her opinion on iffy issues.

She says this is perfectly legal. What they are doing is essentially providing you with what our firm calls "flex dollars" to pay for your benefits. She says nothing in the law requires that they let you have any overage in cash; it's quite legal for them to mandate where the difference goes. She seemed surprised that I asked the question - she thought it was obvious.

Even if you have other investments, a few tax-deferred dollars in a 401k can't hurt you and might be useful some day.