Author Topic: Something weird happened...automatically got into a 401k?  (Read 3280 times)

astvilla

  • Stubble
  • **
  • Posts: 234
Something weird happened...automatically got into a 401k?
« on: October 09, 2016, 02:43:47 PM »
2 questions. 

1.  I work this per diem job, in interview year ago by manager, told I don't get a 401k.  Then a little over a year later (last month), I get this letter about changes to my 401k.  Well I don't have a 401k, don't have account, nothing I knew about.  So I just ignored it.

I pick up my pay stubs (I'm direct deposit) this week and notice in the last 3 checks, there's this 401k deduction.  I'm like what? I haven't done anything.  I go back to the letter I kept for no reason, follow the website link, made an account, put in my SSN, and lo and behold, they have my address and money in a 401k.  They also matched 40% it looks like?  So far, i put in 70 ish, they matched 50ish.

Now when I look at the plan, excluded employees are per diem people like me working 1-5X/month (well I sometimes work more or less).  But somehow, my money was automatically being deposited there.  Somehow I got enrolled just recently when I wasn't before and not qualified to.

So my question is...do I bring it to the attention of my manager and ask him what is going on?  I'm afraid he'll pull the plug or stop it.  I was wondering if I can sort of continue to sneak and put money into it without anyone knowing, (if that's okay to do, they can't just steal the money away) or maybe the 401k plan changed and allowed per diem to contribute.  Cause I can put in 100% of my paycheck into it now till end of year.  Yearly salary from this job is about 24K, if they match 40%, I can put 10.8K pretax and they match 7.2K I think.   I'm just wondering why all of a sudden, I now have a 401k automatically and should I alert or keep it to myself?  (I plan to call Transamerica tomorrow).  Accounting error? 1 year of service? I would've been told that in the interview I think.  Did I have one all along and wasn't told?

2.  Unrelated, but if foreign property or inheritance is brought to the US, how is it taxed, or taxed at all?  There's foreign inheritance tax/property sale tax, is there a tax for US? Or for New Jersey specifically, like do tax laws apply?

Thanks.

Gin1984

  • Magnum Stache
  • ******
  • Posts: 4700
Re: Something weird happened...automatically got into a 401k?
« Reply #1 on: October 09, 2016, 04:44:56 PM »
If they screwed up, they legally can take money back.  Not sure about pulling your money out though. 

Hotstreak

  • Pencil Stache
  • ****
  • Posts: 770
Re: Something weird happened...automatically got into a 401k?
« Reply #2 on: October 09, 2016, 04:56:09 PM »

Cause I can put in 100% of my paycheck into it now till end of year.  Yearly salary from this job is about 24K, if they match 40%, I can put 10.8K pretax and they match 7.2K I think. 



I'm not sure if this is a typo on your part, but the 18k limit is actually the limit that you can individually contribute.  Your company can contribute on top of that, towards a much higher limit.  So, if your company matches 40% of all contributions, you could contribute 18k and they would put in an additional 7.2k, for total annual contribution of 25.2k.

pbkmaine

  • Walrus Stache
  • *******
  • Posts: 8275
  • Age: 62
  • Location: The Villages, Florida
Re: Something weird happened...automatically got into a 401k?
« Reply #3 on: October 09, 2016, 05:40:02 PM »
Your company may have instituted an "opt-out" rather than "opt-in" policy for its 401(k). It's also known as auto enrollment.


Sent from my iPad using Tapatalk

astvilla

  • Stubble
  • **
  • Posts: 234
Re: Something weird happened...automatically got into a 401k?
« Reply #4 on: October 09, 2016, 07:05:13 PM »
If they screwed up, they legally can take money back.  Not sure about pulling your money out though.

Oh really? Isn't that robbery? I mean I wasn't aware I even had money in a 401k until I opened one following a link.  I was told I wouldn't qualify, just seems strange.

I understand if they take the company matching, but they can even take away my contributions which I didn't ask for or even know about? That sounds illegal. 

pbkmaine

  • Walrus Stache
  • *******
  • Posts: 8275
  • Age: 62
  • Location: The Villages, Florida
Re: Something weird happened...automatically got into a 401k?
« Reply #5 on: October 09, 2016, 07:07:19 PM »
Auto enrollment is not only NOT illegal, it is hands down the best way to get employees to save for retirement.


Sent from my iPad using Tapatalk

Metric Mouse

  • Walrus Stache
  • *******
  • Posts: 5299
  • FU @ 22. F.I.R.E before 23
Re: Something weird happened...automatically got into a 401k?
« Reply #6 on: October 09, 2016, 07:55:17 PM »
If they screwed up, they legally can take money back.  Not sure about pulling your money out though.

Oh really? Isn't that robbery? I mean I wasn't aware I even had money in a 401k until I opened one following a link.  I was told I wouldn't qualify, just seems strange.

I understand if they take the company matching, but they can even take away my contributions which I didn't ask for or even know about? That sounds illegal.

No, they can't take out your contributions.   They may be able to make you move them somewhere else, though.

Gin1984

  • Magnum Stache
  • ******
  • Posts: 4700
Re: Something weird happened...automatically got into a 401k?
« Reply #7 on: October 09, 2016, 08:03:32 PM »
I guess I was unclear, they can remove their match.  For your money I am not sure if they would allow you to roll out over or would require you to cash it out (and therefore paying taxes on it).

Sent from my SPH-L710 using Tapatalk


catccc

  • Handlebar Stache
  • *****
  • Posts: 1677
  • Location: SE PA
Re: Something weird happened...automatically got into a 401k?
« Reply #8 on: October 10, 2016, 07:12:12 AM »
A lot of 401K plan changes are self service.  Like, to change my contribution amount or percent, I head directly to the fidelity site and do it there.  I don't speak to my manager or anyone in HR.  Fidelity tells my employer what I've elected and they follow through on it with payroll.

The plan may cap the %, so you might want to look into that.

Also, go through the plan docs carefully and see if you can find some language indicating you are eligible.  If deductions started happening on your 1 year anniversary, that timing might be a clue that you are in fair and square.

Mr. Green

  • Handlebar Stache
  • *****
  • Posts: 1898
  • Age: 35
  • Location: Wilmington, NC
Re: Something weird happened...automatically got into a 401k?
« Reply #9 on: October 10, 2016, 07:59:54 AM »
Perhaps your manager meant you don't get a 401k right away? Some companies have a period that has to pass before you qualify for their 401k, and a year is not unheard of. My wife's company required 6 months of service before she qualified for their 401k.

bacchi

  • Magnum Stache
  • ******
  • Posts: 3631
Re: Something weird happened...automatically got into a 401k?
« Reply #10 on: October 10, 2016, 09:43:17 AM »
When W2 contracting, a lot of the staffing agencies have a 1 year wait period. That time is never met for the usual short contracts so I've always scoffed at this "benefit."

It sounds like you passed the wait period, like Mr Green suggested. Congrats.

astvilla

  • Stubble
  • **
  • Posts: 234
Re: Something weird happened...automatically got into a 401k?
« Reply #11 on: October 10, 2016, 10:30:46 AM »
I called Transamerica twice.  One said I'm eligible based on that I was auto-enrolled and initial lanuage.  I apparently worked for a year, and qualified.  She reassured that I was eligible and they wouldn't take money away.  50% vested after 1 year, 100% vested after 2. Another rep is following up to make sure by asking.  I'm concerned I just screwed myself by being honest. 

Ahh yes it's not 40% (that would be really weird), it's 100% of the first 1%, and 50% of the next 5%? So 3.5% of each paycheck (gross).  The 40% is just what I'm seeing now, I guess cause I was automatically contributing very little.  Yeah was misinformed.

Cause it's near the end of year, I changed to max out at 100% of paycheck towards contribution.  I didn't know people stretch it out over the year to get a match.  Cause if you max 18K too early, you'll lose the match for say 6 months if you maxed 18k the first 6 months.

I'm only per diem so the communication about what's going on isn't the greatest. I'm not telling HR or the manager. At worst it seems they can kick me out (even though a job description of the plan says someone like me wasn't qualified, Transamerica said I was). The language was legal speak like, no specific or reassurance from second rep, just vague.  Worst case is they kick me out.  I hate being honest; I probably should've stayed quiet instead of screwing myself over.  I need to stop being way too honest about everything in life and learn to shut up

catccc

  • Handlebar Stache
  • *****
  • Posts: 1677
  • Location: SE PA
Re: Something weird happened...automatically got into a 401k?
« Reply #12 on: October 10, 2016, 01:38:49 PM »
Keep us posted.  I hope it all works out and you get to stay in the plan!

bada bing

  • 5 O'Clock Shadow
  • *
  • Posts: 11
Re: Something weird happened...automatically got into a 401k?
« Reply #13 on: October 10, 2016, 06:58:16 PM »
The usual recommendation for the order of contributions towards retirement is:
1. 401K up to the company match (6% of salary in your case?)
2. IRA contributions up to the annual limit - Roth or deductible depends on tax brackets
3. Continue filling up annual 401K contribution limits

I'd do some research on your 401K plan. What are the investment options ? What
additional features does it have: like allowing after tax contributions ? In service roll overs?
What are the available terms of loans ? Does it have a Roth option ? Are there any fees
beyond the ER of the individual funds offered ? Is there a percentage maximum for contributions?
You need to know what you have before dumping everything into it.

Goldielocks

  • Walrus Stache
  • *******
  • Posts: 6230
  • Location: BC
Re: Something weird happened...automatically got into a 401k?
« Reply #14 on: October 11, 2016, 01:01:46 AM »
I'm in Canada, and for my second job (4x per month), I have to sign a paper to elect to NOT be auto joined into the retirement plan...  auto joining is used to get more employees to contribute, so that those over $100k salary or high earners do not get a ridiculously low cap placed on their allowed 401k contributions.
---------------------------------------
As to bringing in foreign money into the USA...  there should be no tax or withholding on it.  Just ensure that you declare it / fill out all the right paperwork at the bank  or when you carry it across the border  (the anti-money laundering paperwork), and look around for best rates of currency conversion, which can vary widely.

Source -- We brought in a fair amount to the US when we moved there.  It was nice to have a self directed investment account in US$'s, at a US investment brokerage...   the trading fees in the USA are very low!. (first 100 per year were free).  Very easy to bring money in, and easier than keeping it outside of the USA as you need to remember to make the regular disclosure statements to the IRS about it and that paperwork requirement is easy to overlook / changes.

Enigma

  • Bristles
  • ***
  • Posts: 469
  • Age: 39
  • Location: Clarksville, TN
Re: Something weird happened...automatically got into a 401k?
« Reply #15 on: October 11, 2016, 07:02:26 AM »
I am sure it isn't a mistake but would just go to HR and double check.  I agree that some companies make you wait (1yr, 6m, whatever).

Your max contribution is 18k...  The company can contribute much more.  But it will most likely be capped around 6%.  Also I would try and max it out myself after checking with HR...  just saying.

astvilla

  • Stubble
  • **
  • Posts: 234
Re: Something weird happened...automatically got into a 401k?
« Reply #16 on: October 18, 2016, 10:13:11 AM »
It was a mistake.  Apparently I'm not eligible and it was reversed.  They'll be sending me a check of my contribution.  So no 401k for me.

This really sucks balls.  There goes $6-8K in tax savings and matching.  I was really counting on that.  I hate having expectations exceeded, raised, then dropped so suddenly.

Lesson in life, stop being honest all the time, don't be a nice guy, be more mean.  I need to be a better liar and just keep my mouth shut.  Though I don't know what would've happened if I did.  Maybe it would've been inevitable.  Honesty, I learn, is not always a good thing. 


The question on foreign holdings is more for my parents.  They inherited some foreign real estate (1/4 an apartment) and are wondering if it's taxed if sold and cash is brought back to the states.  This is from Taiwan.  I think they pay inheritance tax over there but not sure what happens if proceeds are brought to US.  Anyone familiar with this situation?

The_Dude

  • Stubble
  • **
  • Posts: 193
Re: Something weird happened...automatically got into a 401k?
« Reply #17 on: October 18, 2016, 04:05:09 PM »

The question on foreign holdings is more for my parents.  They inherited some foreign real estate (1/4 an apartment) and are wondering if it's taxed if sold and cash is brought back to the states.  This is from Taiwan.  I think they pay inheritance tax over there but not sure what happens if proceeds are brought to US.  Anyone familiar with this situation?

Sorry to hear about the 401k.  Are your parents US citizens?  Generally, the US taxes US Citizens on your worldwide income and offers a credit or deduction for foreign taxes paid.  If your parents sell an inherited asset overseas then the IRS is going to want their share of any gains from the sale.  It does not matter if they "bring the cash back to the US."  You might be confusing corporate tax law and news articles on Company's parking cash overseas to avoid paying taxes.  This doesn't apply to individual tax payers.  You also need to obtain an understanding of the "basis" your parents will have in the eyes of US tax law when they inherit the apartment. Normally, in the US the estate pays taxes on unrealized gains in property and therefore the person inheriting the property has a basis equal to the fair market value claimed on the estate tax return.  I'm not sure how it works with foreign inheritances.   

The_Dude

  • Stubble
  • **
  • Posts: 193
Re: Something weird happened...automatically got into a 401k?
« Reply #18 on: October 18, 2016, 04:18:12 PM »
forgot to add one other thing.  If your parents have foreign bank accounts (now or after inheritance) you better make sure they are complying with FATCA.

Petunia 100

  • Stubble
  • **
  • Posts: 131
Re: Something weird happened...automatically got into a 401k?
« Reply #19 on: October 18, 2016, 04:49:00 PM »
Lesson in life, stop being honest all the time, don't be a nice guy, be more mean.  I need to be a better liar and just keep my mouth shut.  Though I don't know what would've happened if I did.  Maybe it would've been inevitable.  Honesty, I learn, is not always a good thing. 

They would have caught it, Astvilla.  401k plans are subject to all sorts of scrutiny.  Compliance testing is done annually.  They don't let ineligible employees participate. 

astvilla

  • Stubble
  • **
  • Posts: 234
Re: Something weird happened...automatically got into a 401k?
« Reply #20 on: October 23, 2016, 03:29:40 PM »
Thanks The_Dude, that was really helpful actually.

Lesson in life, stop being honest all the time, don't be a nice guy, be more mean.  I need to be a better liar and just keep my mouth shut.  Though I don't know what would've happened if I did.  Maybe it would've been inevitable.  Honesty, I learn, is not always a good thing. 

They would have caught it, Astvilla.  401k plans are subject to all sorts of scrutiny.  Compliance testing is done annually.  They don't let ineligible employees participate. 

Yeah you're probably right.  That was a fear I had and it was why I decided to be honest. Rather be let down a little then let down big time in the future.  I've gotten over it surprisingly.