My company is making it mandatory for us to have 401k by Jan. 1st. IS this legal? Someone give me some info to search on the web or something to aid me in making a decision to seek legal counsel.
2006-12-14 21:00:15 · 4 answers · asked by LSD 4 in Business & Finance ➔ Careers & Employment
I'm aware of the positive side of looking out for my future. thanx though. I have a saving just not 401k with my company. They will match 100% of 3% and 50% of 6% which is FREE money to me. I just wanted to know if it was legal.
2006-12-14 21:22:09 · update #1
It should be YOUR CHOICE as to whether or not you want a percentage of your paycheck being taken out. Nobody should be able to force you to do this(even if it is in your best interest). You earn the money, it's yours and nobody can tell you house to spend your paycheck!!
2006-12-14 21:02:47 · answer #1 · answered by Anonymous · 0⤊ 1⤋
Not only is it legal, it is extremely responsible. More companies should make their employees plan for their retirement. Companies usually have to match all funds placed into a 401k account, so it is acctually a pay raise, not a paycut. More than half of all Americans retire below the poverty line. If you can't set aside some money for your retirement, you WILL be one of them.
***EDIT***
Ok, so they match 100% of your deposits up to 3% of your income, and another 50% of your deposits for the next 3%, so that means on 6% of your income even before your 401k has "made" any money, it has brought you a 75% return on your money (If 3% of your income is $100, then when you put in $200, your company puts in $150 for a total of $350, a 75% return on your $200). This is not including the fact that your money is probably invested before taxes, saving you income tax on that $200, and possibly even putting you in a lower tax bracket if you are close. This is also not considering that historically 401k's are very safe investments, and historically the grow at a good interest rate. While contributing to your own retirement fund is good, I seriously doubt that any of them start off with a 75% return on day 1. If you want to save beyone the 6%, invest somewhere else, if not, it is good to diversify. Since so many people retire with nothing, not only could you be doing yourself harm by taking legal action against your company, but almost everyone who works there. Don't fight free money!
2006-12-15 05:08:19 · answer #2 · answered by Serving Jesus 6 · 0⤊ 0⤋
...aside from the fact that you should have some form of retirement savings, and 401Ks are the best...
I am unaware of anything illegal with it, but you can verify with your state's Department of Labor (do a search on the web, plus there are links from the Federal Dept of Labor web site).
...but if yur company is contributing to it as well, you might want to think twice before complaining. The penalty for withdrawl is the taxes owed plus an 8% penalty. If you contribute after tax, then the only tax on withdrawl would be the 8% plus tax on interest. If the company is contributing more than 8%, it is a real bonus. If this is a viable route for you, see if you can borrow against the amount or make an early withdrawl.
2006-12-15 05:12:37 · answer #3 · answered by schester3 3 · 0⤊ 0⤋
yeah what daft one said. My company has 401k but does not make anyone take it. Get a lawyer
2006-12-15 05:08:19 · answer #4 · answered by Anonymous · 0⤊ 0⤋