Forced membership in company 401k plan - The Finance Forums: Financial planning, debt help, loans, mortgages, retirement and 401k, investment, and general finance discussion forums

jetmech · #1 (**permalink**) 04-02-2008, 12:54 PM

I recently received a letter in the mail confirming my "automatic enrollment" in the 401k plan of the company I work for. I've been with this company for 5 years and have previously made the decision not to participate in this plan.
Now, I was not told this was going to happen. I did not ask to be enrolled in this plan. I did not consent to be enrolled in this plan. I do not want to be enrolled in this plan. Yet they started payroll deductions anyway.
I was able to get out of it but not before they took a bunch of my money, that I don't want them to have and I cannot get back until I am 59 1/2.

Has anyone ever heard of this type of thing before?
Is this even legal?

GarySpicuzza · #2 (**permalink**) 04-02-2008, 11:15 PM

Quote:

Has anyone ever heard of this type of thing before?
Is this even legal?

Yes, it's called the The Pension Protection Act of 2006.
See THIS link.
From link:

Quote:

Approximately one-third of eligible workers do not participate in their employers’ 401(k)-type plans. Studies suggest that automatic enrollment plans (in which workers “opt-out” of plan participation rather than “opt-in”) could reduce this rate to less than 10%, significantly increasing retirement savings.

The Pension Protection Act (PPA) President Bush signed into law last year removed impediments to employers adopting automatic enrollment, including employer fears about legal liability for market fluctuations and the applicability of state wage withholding laws.

jetmech wrote:

Quote:

Yet they started payroll deductions anyway.
I was able to get out of it but not before they took a bunch of my money, that I don't want them to have and I cannot get back until I am 59 1/2.

The 59 1/2 age has to do with the age one can take withdrawals from qualified and non-qualified pension plans WITHOUT incurring a 10% penalty from the IRS.

Since you were automatically enrolled and opted out I would think you should be able to escape any IRS penalties EXCEPT for the fact that you would be dealing with non-human IRS computers.

jetmech · #3 (**permalink**) 04-03-2008, 01:05 PM

Thanks Gary.
Once again, our government imposing their will way too f...ing much in our lives.

AllThingsPersonalFinance · #4 (**permalink**) 04-10-2008, 09:06 PM

Quote:

Originally Posted by jetmech

I recently received a letter in the mail confirming my "automatic enrollment" in the 401k plan of the company I work for. I've been with this company for 5 years and have previously made the decision not to participate in this plan.
Now, I was not told this was going to happen. I did not ask to be enrolled in this plan. I did not consent to be enrolled in this plan. I do not want to be enrolled in this plan. Yet they started payroll deductions anyway.
I was able to get out of it but not before they took a bunch of my money, that I don't want them to have and I cannot get back until I am 59 1/2.

Has anyone ever heard of this type of thing before?
Is this even legal?

Yup, happened to my wife at her company too. Unfortunate.

Government should be left to doing what it does best: delivering the mail and protecting the shores.