unwanted 401k

[stoodie]

What is the name of your state? OHIO

About 6 years ago, I had 1/2 of my profit sharing put into a 401k. Problem is, I never had a 401k before then. When I asked how they could open up a 401k in my name without my permission or signature, the controller, then one of the owners said " yeah we can do that". The rumor was that the owner's % of contributions was too great and he was looking at being fined, so he gave(?) money to the Mexicans working there who had 401k's. The government said if you're going to give money to the Mexicans, you have to give it to everybody. But it was no gift, it was my money. Question 1: can a 401k be opened in my name when I didn't want it & didn't sign anything? Question 2: can an employer force their employees to contribute just so the employer can increase their own contributions?
Question 3: Would this possibly be grounds for a civil suit? At the time, I didn't want to rock the boat too much, but I no longer work there & don't care.
P.S. I have also found out I wasn't the only one this happened to.

 

[Beth3]

Question 1: can a 401k be opened in my name when I didn't want it & didn't sign anything? Yes. It is completely legal for an employer to make contributions to an employee's retirement plan.

Question 2: can an employer force their employees to contribute just so the employer can increase their own contributions? Maybe. It depends entirely on what the 401(k) Plan Document (which must be filed with the IRS) states.

Question 3: Would this possibly be grounds for a civil suit? It you think something unlawful is taking place, then you need to contact the federal Department of Labor and discuss the situation with them. The DOL has jurisdiction over employer-sponsored retirement plans.

 

[stoodie]

OK, it may be legal, but it seems downright immoral that an employer can force my pay into a 401k just to increase his own holdings in the plan.

 

[cbg]

There is a type of plan called a "negative enrollment". On a negative enrollment plan, everyone automatically gets enrolled UNLESS they specifically tell the employer they do not care to contribute. If yours is a negative enrollment plan, it's YOUR responsibility to tell the employer NOT to sign you up.

However, there is another possibility and based on your description it seems even more likely. My firm has a plan where any employee who has been with the firm for two years or more, has an employER contribution made to the 401k in their name even if they do not participate; however, none of THEIR pay gets contributed unless they actively enroll in the plan. Once a year, with the amounts based on profit sharing, every eligible employee gets the employER match. If they don't choose to contribute any of their pay, that's their right. But it is the firm's right to make a contribution in their name. It's the firm's money; they get to decide how it's spent, and they choose to spend this much on their employees. They don't HAVE to provide profit sharing at all; if they choose to provide it this way, they can.