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dani731
Blessed!!!
Member since 1/08 3355 total posts
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D
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Re: Did anyone here get 401k money refunded to them because they failed the "highly compensated employee test" ????
Posted by nrthshgrl
Posted by Kara
Posted by dani731
The 401K at my job has this rule also. It is actually quite common. The year before last year my job also implemented the auto enrollment. If you dont want to participate in the 401k, you have to sign & return a paper to opt out. if you don't return the paper you are automaticaaly enrolled for 3%
ALL 401(k)s are subject to this regulation.
I believe she was referring to the auto-enrollment. Not all companies auto-enroll employees.
I wasn't 100% sure if this rule was for ALL 401(k)s or not, so i didn't want to make that statement. I don't like to make statements like that unless I am 100% sure it is true.
And yes the auto enrollment is not required for all 401(k)s but it is used in an attempt to get more people to participate in the plan so things like this don't happen.
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Posted 3/17/09 3:30 PM  |
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smdl
I love Gary too..on a plate!
Member since 5/06 32461 total posts
Name:
me
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Re: Did anyone here get 401k money refunded to them because they failed the "highly compensated employee test" ????
Posted by Michelle
It is not unethical or illegal, and not a company policy. Every plan is subject to this.
It is set up as an incentive for the higer ups to make it easier for the non higher ups to contribute and to offer better matching, change the vesting rules and when they are eligible. It stinks when you are stuck in the middle, not a higher up with control and contributing.
Can someone clarify this for me?
What is the rule?
I thought that you were allowed to contribute to a 401K up to the limit set by the Government. What is it now? $15K per year?
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| Posted 3/17/09 5:08 PM |
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MarathonKnitter
HAPPY
Member since 2/07 17374 total posts
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EMBRACING CHANGE
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Re: Did anyone here get 401k money refunded to them because they failed the "highly compensated employee test" ????
Posted by smdl
Posted by Michelle
It is not unethical or illegal, and not a company policy. Every plan is subject to this.
It is set up as an incentive for the higer ups to make it easier for the non higher ups to contribute and to offer better matching, change the vesting rules and when they are eligible. It stinks when you are stuck in the middle, not a higher up with control and contributing.
Can someone clarify this for me?
What is the rule?
I thought that you were allowed to contribute to a 401K up to the limit set by the Government. What is it now? $15K per year?
you're right. that is the personal amount.
but the plan as a whole needs to follow different guidelines to make sure it doesn't discriminate against non-highly-compensated employees. it seems that the plan in question failed its compliance testing. if they didnt' give her back her money, they would have to pay a hefty fine for EVERY DAY the money is not returned to her.
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| Posted 3/17/09 5:22 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Did anyone here get 401k money refunded to them because they failed the "highly compensated employee test" ????
Posted by libby2595
but the plan as a whole needs to follow different guidelines to make sure it doesn't discriminate against non-highly-compensated employees. it seems that the plan in question failed its compliance testing. if they didnt' give her back her money, they would have to pay a hefty fine for EVERY DAY the money is not returned to her.
But what I don't understand is WHERE is the discrimination part coming in? This whole idea is ridiculous to me.
How are you discriminating against lower salaried employees just because I contribute to my 401k and they dont? We both the option. I chose yes. They chose no. Their choice has nothing to do with my choice.
This is a dumb IRS law.
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| Posted 3/17/09 5:32 PM |
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smdl
I love Gary too..on a plate!
Member since 5/06 32461 total posts
Name:
me
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Re: Did anyone here get 401k money refunded to them because they failed the "highly compensated employee test" ????
Posted by ave1024
Posted by libby2595
but the plan as a whole needs to follow different guidelines to make sure it doesn't discriminate against non-highly-compensated employees. it seems that the plan in question failed its compliance testing. if they didnt' give her back her money, they would have to pay a hefty fine for EVERY DAY the money is not returned to her.
But what I don't understand is WHERE is the discrimination part coming in? This whole idea is ridiculous to me.
How are you discriminating against lower salaried employees just because I contribute to my 401k and they dont? We both the option. I chose yes. They chose no. Their choice has nothing to do with my choice.
This is a dumb IRS law.
I have to agree with you. It's rather unfair for someone who wants to contribute to their 401K but can't because others don't. And it might not be because of the economy. For all we know they could have CDs and IRA on the side.
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| Posted 3/17/09 5:39 PM |
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MarathonKnitter
HAPPY
Member since 2/07 17374 total posts
Name:
EMBRACING CHANGE
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Re: Did anyone here get 401k money refunded to them because they failed the "highly compensated employee test" ????
Posted by ave1024
But what I don't understand is WHERE is the discrimination part coming in? This whole idea is ridiculous to me.
the discrimination comes in with an assumption: if the highly-compensated employees out-weigh the non-highly-compansated, then there is a chance that the plan isn't being offered or publicized equally to all employees.
Posted by ave1024
How are you discriminating against lower salaried employees just because I contribute to my 401k and they dont? We both the option. I chose yes. They chose no. Their choice has nothing to do with my choice.
this is where the discrimination comes in, maybe the plan isn't even offered to lower-paid employees, or only to a handful to look like they are being fair.
Posted by ave1024
This is a dumb IRS law.
i agree with you. it especially sucks if you're at the low end of the highly-compensated employees of the company. you bust your hump to make a decent living but not enough to get away with murder finanically... but not little enough to get the "hand-outs".
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| Posted 3/17/09 7:49 PM |
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mommyof2tobe
LIF Infant
Member since 1/07 50 total posts
Name:
Me
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Re: Did anyone here get 401k money refunded to them because they failed the "highly compensated employee test" ????
The IRS code and legislation that deals with this is very cumbersome and convoluted in some ways. To prevent employers from designing 401k plans that economically benefit only highly-paid personnel, lawmakers wrote compliance test mandates into the rules governing 401k plans. The company can always choose to use a safe harbor method to avoid testing.
Discrimination is also in the form of ability to contribute. If the Rank and File employees are paid so much less then the top 5%, they may not have the ability to contribute to a Defined Contribution Plan.
Discrimination also lies in the employer contributions.
I am not a TPA nor an expert on ERISA but I think these tests for DBP and DCP are in the best interest for the majority of workers who don't fall into the highly compensated range.
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| Posted 3/17/09 9:48 PM |
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