Is it typically possible to decline a company match for a 401(k)?

Question

Due to the nature of my job, the company match for my 401(k) actually comes out of my eligible pay. Which means that if I don't put money in and get the match, I would receive pay for what the company otherwise would have put in as a match in addition to my regular contribution amount. While I don't mind putting the extra money in my account, I'm not able to reap any additional year-end tax benefits for it.

I know this is not a typical situation, but I'm hoping that someone can tell me if it's even possible since the tax benefits could mean I could afford to contribute even more.

Due to the nature of my job, the company match for my 401(k) actually comes out of my eligible pay. Which means that if I don't put money in and get the match, I would receive pay for what the company otherwise would have put in as a match in addition to my regular contribution amount. While I don't mind putting the extra money in my account, I'm not able to reap any additional year-end tax benefits for it.

I know this is not a typical situation, but I'm hoping that someone can tell me if it's even possible since the tax benefits could mean I could afford to contribute even more.

I work on an SCA contract through the federal government. In addition to wages, we are given a stipend for benefits. The stipend is reduced by any company paid benefit made on our behalf (company portion of medical insurance for example). If the cost of the benefits are lower than the stipend, they must pay out the difference. Company match to the 401(k) is used to reduce the stipend I would be paid.

Sorry for the earlier duplication. I am by no means saying that I do not want to continue contributing to the 401(k). Merely if I can contribute the full amount myself to receive additional tax benefits.

Since I know most people are not familiar with government contracts. This is directly off of a DOL site for my contract.

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HEALTH & WELFARE: Life, accident, and health insurance plans, sick leave, pension
plans, civic and personal leave, severance pay, and savings and thrift plans.
Minimum employer contributions costing an average of $3.16 per hour computed on the
basis of all hours worked by service employees employed on the contract.
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Answer 1

Something does not sound correct here. What is the nature of your job that it allows the employer to take your wages and use it as a match?

Answer 2

You're foolish if you don't take advantage of the company match. Your 'year-end tax benefit' comes in the form of that free money growing tax-free until you retire. Maybe in your case, the money isn't free, since you say the company puts the extra money in your pay, something I have never heard and something that I'm sure most companies do NOT do. But even if you are earning extra pay as a result of not contributing, by not contributing, you have zero money working for you tax free until you retire, and you will be the big loser in the long run.

Answer 3

Additional info. It's sounding like a plan I've heard of in the past. That company budgeted $5000 of monopoly money for each employee and then gave them a menu of items to choose from. Eg, great health care, low deductible cost for single employee was $3000 in monopoly money. same health care, high deductible cost $2000 in monopoly money. Any money not used went into the 401K. The idea was to fix the cost for each employee and play fair with single employees whose health carecosts would not be as high as a married employee with kids.

The one thing the employees couldn't do was take the money as cash--since taking it as cash blew up away the pre-tax option for the health care benefits.

Since the money is going into the 401K, it *IS* pretax and you won't pay taxes on the money until you take it out in retirement. You risk a 10% penalty if you take the money before you are 59.5, but you do in fact get a tax benefit.

Answer 4

Shane: You've got this wrong somehow. Go back to HR and get it straight.