2006-11-11 17:14:54 · 6 answers · asked by Rhonda M 1 in Business & Finance ➔ Personal Finance
No. They can only control how much they will match, and the rate at which they will match your contribution. The federal government controls how much (% of) your salary you can contribute.
2006-11-11 17:22:23 · answer #1 · answered by Random Precision 4 · 0⤊ 0⤋
401k is a voluntary contribution, it has its own rules and is govberned by trustees selected by the members of the fund. The sponsor sets up certain criteria e.g. how much they will much and when it is vested. This means after how long in your service to the company shall the companies contribution become yours. most have a graduated scale of 2, 3, 4 and 5 at 20%, 60%, 80% and 100%
The amount you contribute is your choice and the company cannot dictate. The fund's rules however may assert that you may not contribute less than $50, while the IRS has it's own rules for each year for example the maximum contribution for 2006 if I am not wrong is $12,000, and for 2007 $15,000.
Remember that this is a tax deductibel contribution that there is no tax on what you are contributing. If your company has this scheme whether funded or not, go ahead and participate with however much you are able, it wil help you in the future.
I have said al lot, and hopefully answered your question in the process.
2006-11-12 01:39:09 · answer #2 · answered by Trinity 4 · 0⤊ 0⤋
You must be talking about companies automatically signing you up for a 401K. They are doing this because most people don't get around to setting up their 401K when they start working. You should start with the maximum percentage that you can get matching dollars (mostly 5-6%) Most companies will give you 50% or more on that money. It's FREE money that you can't get anywhere else for your retirement. Take advantage of every dollar the company gives you. You will not have to pay any taxes on that money until you retire.
2006-11-14 13:50:24 · answer #3 · answered by Steve R 6 · 0⤊ 0⤋
No, they can't dictate that you contribute, they can only limit their contributions.
The federal government will only allow you to put so much money in a 401k on a before tax basis each year. This year I believe the cap is 15000 before tax.
A company will usually match you contributions up to 3% of your pay, or match 1/2 of your contributions up to 6% of your pay. I am sure there are some companys that even have better benefits than this.
2006-11-12 02:20:07 · answer #4 · answered by Anonymous · 0⤊ 0⤋
No, participation is voluntary but I believe a recent change in the law let companies default to having new employees participate then they have to opt out to stop participating.
But anyone who does not contribute at least the maximum that the company matches is an idiot.
2006-11-12 11:54:15 · answer #5 · answered by frugernity 6 · 0⤊ 0⤋
I don't believe so. They can tell you how much they will match, but shouldn't tell you that you have to put in.
2006-11-12 01:17:25 · answer #6 · answered by Mariposa 7 · 0⤊ 0⤋