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califonia and force 401k? California

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  • califonia and force 401k? California

    hmm not really sure where to inquire about this. I found these boards and they look like a good place to start.

    I'm not sure if were supposed to mention the company name or anything so lets say i work in California for a major Home Improvement chain.

    Recently i found out that the company will be taking 1% of your paycheck every payday and putting it into a 401k of their choosing without your consent if you are not currently enrolled in one. I dont have a 401k and dont want one, I put my money into CD's and work there part time while im learning how to manage several properties my father owns.

    There was no notice sent out and when i asked other people they hadn't heard of this either. The only way i found out about it was reading the company rag they throw in the break room one day when i was bored. Evidently the only way to stop this is to get with HR and tell them specifically not to do this but im past the due date for that since i was given no notice. Im going into HR tomorrow and telling them to cancel it immediately but im not sure if i'll get a penalty for taking the 1% of the coming check they took without my consent

    This seems really screwy to me. Is this legal? Can employers just take money from your paycheck without your consent and put it into things like 401k's where there will then be a penalty to get that money back? I found this page

    http://www.dir.ca.gov/DLSE/

    but it looks like the only way i can send an inquiry is to send a snail mail letter to the office in my area down in oakland. So i'm wondering if anyone here knows if this is legal and who i could contact to get this stoped if it isn't

  • #2
    The short answer is that it is probably legal. Since 2000 IRS had internally ruled that employer automatically enrolling employees was legal (subject to certain limitations). Since IRS internal rules was legally problematic in certain states such as CA, in 2006 Congress passed the Pension Protection Act of 2006, which (among other things) removed state objections (including California's) to automatic enrollment in 401(k) and other deferred compensation plans. This was effective January 1st, 2008.

    I mentioned that this is subject to certain limitations. One of the limitations is that automatically enrolled employees can stop the deduction and withdraw the deferral without penalty (but subject to the normal taxes) for a maximum of 90 days after the first deduction.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

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    • #3
      hmm ok tnx as long as i can get my money back without penalties it should be fine. Just annoying that im the one that has to do extra work to NOT do something =P

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      • #4
        Your employer did nothing wrong in enrolling you in the 401K. The hyperlink below is to press release describing a program by the Department of Labor to automatic enroll employees in a 401K program at a basic level.

        http://hr.blr.com/news.aspx?id=19329

        You should have received a notice regarding this automatic enrollment program into a 401K program and been given an opportunity to opt out of the 401K program. Talk to your personnel department regarding opting out of the 401K program.
        I am not an attorney. My personal opinions are not legal advice.

        "The only thing we have to fear is fear itself." --- Franklin Roosevelt

        The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy. --- Martin Luther King Jr.

        A trap was set once upon a time; however, the designer fell in himself!!

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        • #5
          ya the part that irks me is i got NO notice at all. The only way i heard about it was reading the company rag in the break room one day.

          Talked to HR and set it back to zero. He claims i'll get the money back in a check or two, we'll see. Tnx for the info guys

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