401k Age discrimination?

[NewbernD]

Hi.. I live and work in Maryland.

I searched for an answer, but didn't find anything relevant. So, I ask:

My company chooses how much of my contribution to match based on my age. They match older people, regardless of time in service or position held, at a higher percentage than a younger person like myself.

Does this sound like age discrimination?

I searched a bit on google, and couldn't be sure what some of the results were telling me.

Thanks in advance..

..dave

 

[Beth3]

California is the only State I know of that bars discrimination based on age, period. The federal age discrimination laws apply to those 40 and older so basically, you can favor the 40+ year old crowd and there's nothing you can do about it if you're 39 and younger unless you're in CA.

 

[NewbernD]

Thanks to the quick reply, Beth...

Interesting how those that make the law are probably almost exclusively in that 40+ bracket. That just seems counter-intuitive but if you say so, I'll believe that they can do it.

 

[Beth3]

I just have to observe that if your employer's 401(k) plan is set up that way, that is extremely uncommon (at least in my experience) and I've worked with a variety of different 401(k) plans.

Part of me thinks you must be mistaken about how the match is being made. Retirements plans have to pass annual "discrimination" tests that demonstrate that the plan does not unduly favor the highly compensated. Since it's a lot more likely than not that the highly compensated in ANY company are those who are older (due to their many years of experience older employees are typically in higher level/higher paid jobs whether in the plant or in the executive offices), it seems very unlikely to me that this plan would pass the required federal discrimination tests, unless they happen to have a lot of older employees in the lower paying positions.

I'm only guessing here but as I said, not only is this a very unusual plan design, it strikes me as unlikely it would pass muster with the IRS for the above reason.