They gave us a letter saying that we will automatically be enrolled in a 401k, and that our investments will be chosen automatically according to my date of birth. They give you the option to contact someone to "opt-out",.....but shouldn't this be illegal ?...what if I didn't get the memo ?...shouldn't be the other way around...as in "opt-in" ? Basically...why should I have to take the initiative to stop them from deducting 3% of my money automatically ?
legal or not ?....and please provide some reference if you can...thanks !
2007-10-31 04:27:14 · 10 answers · asked by Anonymous in Politics & Government ➔ Law & Ethics
It is legal. If you don't receive "notice" then you should notice the deductions from your paycheck. If you study up on how a 401k works - you will learn that they are HIGHLY advantageous to you economically and that you will barely notice the missing 3%. Most people LOVE it when a job offers a 401k...
When the government passes 401k laws, the reasoning behind opting "out" instead of "in" have to do with the fact that the majority of people WANT the 401k - so it makes more sense to have people opting "out" instead of "in" from an administrative point of view - it also helps to save trees.
2007-10-31 04:37:00 · answer #1 · answered by Dina K 5 · 0⤊ 0⤋
I read an article about this the other day that said more and more companies are now doing this. I don't see why it would be illegal if they offer you an opt-out and I don't know of any particular law forbidding that kind of thing.
I suspect the real purpose behind it is to prop up the U.S. financial markets. Back in 2001 and 2002, I made a lot of money in the markets by waiting for the end of the month rallies and then selling short the markets on the second, third or fourth of the new month. A big part of the reason that the markets rallied at the end of the month was due to the 401k money coming into the markets. As fast as workers were investing in the markets, traders were sucking their money out and stuffing it into their own pockets.
2007-10-31 04:33:12 · answer #2 · answered by Earl Hickey 6 · 0⤊ 0⤋
Yes, it's legal. The 2006 Pension Protection Act makes this very much a viable way of running a 401k. It's done because Americans need to save more and the powers that be recognize that most people aren't investing simply due to apathy. They figure that if it's invested for you, you'll realize that 3% of your income really isn't that much and you'll leave it there.
As for if you don't get the memo...there is a provision that allows the removal of the funds should you choose to "opt out" within 90 days of the initial contribution being deducted.
2007-10-31 04:53:23 · answer #3 · answered by digdowndeepnseattle 6 · 0⤊ 0⤋
What part of this memo did you miss? You wrote they give you an opportunity to opt out. This isn't mandantory or you would not be given a choice so there is nothing illegal being done. If you are smart, you will let them. I had over $10,000 in my 401k when I left the company I worked for.
2007-10-31 04:32:33 · answer #4 · answered by Sparkles 7 · 0⤊ 0⤋
It is legal and becoming more and more common. In fact the federal government has been passing laws to encourage it.
Does the company offer any matching? If they do, it would be foolish (except in rare cases) not to take it. It is an excellent program. Additionally, you always have the option to opt-out. It's legal.
People need to start saving/investing for their own retirement. Social Security will not be around forever.
There's an old article talking about it here: http://www.usatoday.com/money/perfi/columnist/block/2006-09-04-auto-enroll_x.htm
2007-10-31 04:38:46 · answer #5 · answered by Anonymous · 0⤊ 0⤋
Chances are you agreed to it as part of your employment contract. Even if you didn't the ability to opt out covers them legally.
Having said that I think you should definitely sign up. You won't miss the 3% (and technically it won't even be 3% because you are saving on taxes as well.) Everyone in this country needs to save for retirement. You can't count on social security....
What I would want to do, if I were in your situation, is to make my own choices about investments.
2007-10-31 04:40:19 · answer #6 · answered by Eli L 2 · 0⤊ 0⤋
Yes.
I think it has to do with the Pension Protection Act.
Research has shown that a majority of adults who fail to enroll in their 401k plan do so not out of necessity, but out of apathy.
By automatically enrolling people, and allowing them to opt out (as opposed to the contrary), the apathy effect is eliminated.
And why do you think it should be illegal? They are not taking anything from you, as long as you choose to make the effort to un-enroll.
This could go a long way in helping people who are drastically under-prepared for retirement not have to rely as heavily on the struggling Social Security system.
Edit: LOL at the thumbs down. Facts are facts.
2007-10-31 04:33:54 · answer #7 · answered by Time to Shrug, Atlas 6 · 1⤊ 1⤋
I don't know for sure, but we have 401K here and my boss keeps trying to encourage me to sign up. I haven’t yet because I need every penny I can get at the moment. I am assuming if it was legal, she would have signed me up already. You can contact the benefits administrator about this. If your boss is the administrator, go over their head and contact the group that your 401K goes through.
2007-10-31 04:32:25 · answer #8 · answered by B P 1 · 0⤊ 0⤋
You agree to many things when you accept employment. Depending on the size of the company it may or may not be included in a contract. If you want to sue your employer for not disclosing your enrollment properly, you may find they have easy ways to terminate your employment.
2007-10-31 04:34:05 · answer #9 · answered by paul 7 · 0⤊ 0⤋
confident while you're no longer any further an energetic worker, you do no longer qualify for 401k, if the exams are in basic terms for comission they're in simple terms paying you the final little bit of money you're owed.
2016-11-09 21:34:12 · answer #10 · answered by monsalvatge 4 · 0⤊ 0⤋