Automatic (forced) 401k contributions

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Anonymous User
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Automatic (forced) 401k contributions

Postby Anonymous User » Tue Nov 05, 2013 5:21 pm

Does anyone else have to deal with this bullshit? They are forcing me to put 8% of my salary into a 401k. I'd rather use that money to pay off my loans.

How is this shit legal?

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Danger Zone
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Re: Automatic (forced) 401k contributions

Postby Danger Zone » Tue Nov 05, 2013 5:31 pm

Anonymous User wrote:Does anyone else have to deal with this bullshit? They are forcing me to put 8% of my salary into a 401k. I'd rather use that money to pay off my loans.

How is this shit legal?

It's incredibly paternalistic but... still a pretty good thing to do.

Anonymous User
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Re: Automatic (forced) 401k contributions

Postby Anonymous User » Tue Nov 05, 2013 5:34 pm

Danger Zone wrote:
Anonymous User wrote:Does anyone else have to deal with this bullshit? They are forcing me to put 8% of my salary into a 401k. I'd rather use that money to pay off my loans.

How is this shit legal?

It's incredibly paternalistic but... still a pretty good thing to do.


Not when I have over 100K of loans at 7.9% it isn't.

Anonymous User
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Re: Automatic (forced) 401k contributions

Postby Anonymous User » Tue Nov 05, 2013 5:35 pm

The firm claims I can't opt out unless I show hardship, but that seems like bullshit.

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bk1
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Re: Automatic (forced) 401k contributions

Postby bk1 » Tue Nov 05, 2013 5:39 pm

Anonymous User wrote:The firm claims I can't opt out unless I show hardship, but that seems like bullshit.

Does 6 figures of debt and the tyranny of 8% interest not count as a hardship?

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Danger Zone
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Re: Automatic (forced) 401k contributions

Postby Danger Zone » Tue Nov 05, 2013 5:40 pm

Anonymous User wrote:The firm claims I can't opt out unless I show hardship, but that seems like bullshit.

That does seem like bullshit. I'm obviously not qualified to give tax/legal advice, but I'm fairly certain they are required by law to allow anyone that wants to opt out to do so.

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kalvano
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Re: Automatic (forced) 401k contributions

Postby kalvano » Tue Nov 05, 2013 6:51 pm

Uh, I don't think they can force you to contribute anything.

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NinerFan
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Re: Automatic (forced) 401k contributions

Postby NinerFan » Tue Nov 05, 2013 7:12 pm

Anonymous User wrote:Does anyone else have to deal with this bullshit? They are forcing me to put 8% of my salary into a 401k. I'd rather use that money to pay off my loans.

How is this shit legal?



That sounds terrible. A lot of my fellow first years aren't doing any retirement savings or savings period because they're so far in debt, and 8% is a sizeable chunk. Is there any matching from the firm at least?

Hutz_and_Goodman
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Re: Automatic (forced) 401k contributions

Postby Hutz_and_Goodman » Tue Nov 05, 2013 7:22 pm

What are the tax implications of 401k contributions? If 8% of $160,000 is contributed per year like $14kish) is this deductible from taxable income?

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bk1
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Re: Automatic (forced) 401k contributions

Postby bk1 » Tue Nov 05, 2013 7:25 pm

Hutz_and_Goodman wrote:What are the tax implications of 401k contributions? If 8% of $160,000 is contributed per year like $14kish) is this deductible from taxable income?

401k contributions are tax deductible, though of course you do pay taxes when you withdraw.

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kalvano
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Re: Automatic (forced) 401k contributions

Postby kalvano » Tue Nov 05, 2013 7:29 pm

401(k) contributions are deducted pre-tax, I believe. Aren't they?

Hutz_and_Goodman
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Re: Automatic (forced) 401k contributions

Postby Hutz_and_Goodman » Tue Nov 05, 2013 7:52 pm

bk1 wrote:
Hutz_and_Goodman wrote:What are the tax implications of 401k contributions? If 8% of $160,000 is contributed per year like $14kish) is this deductible from taxable income?

401k contributions are tax deductible, though of course you do pay taxes when you withdraw.


But is this at the capital gains rate?

dixiecupdrinking
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Re: Automatic (forced) 401k contributions

Postby dixiecupdrinking » Tue Nov 05, 2013 8:18 pm

This sounds insane.

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Danger Zone
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Re: Automatic (forced) 401k contributions

Postby Danger Zone » Tue Nov 05, 2013 9:52 pm

kalvano wrote:401(k) contributions are deducted pre-tax, I believe. Aren't they?

You are correct sir.

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A. Nony Mouse
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Re: Automatic (forced) 401k contributions

Postby A. Nony Mouse » Tue Nov 05, 2013 9:56 pm

My understanding was that they can't force you to contribute, but they can make you opt out, and of course, you can't get any matching contributions unless you contribute (so technically, if you're taking their match, I guess you could say that they can make you contribute).

(Contribute looks really funny now.)

Anonymous User
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Re: Automatic (forced) 401k contributions

Postby Anonymous User » Tue Nov 05, 2013 11:41 pm

Hutz_and_Goodman wrote:What are the tax implications of 401k contributions? If 8% of $160,000 is contributed per year like $14kish) is this deductible from taxable income?


It's tax deductible and you don't even pay FICA taxes since it is forced.

No matching other than them giving me what they save on FICA taxes, which isn't much this year, and is barely 1.45% of whatever they take out after that.

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Tiago Splitter
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Re: Automatic (forced) 401k contributions

Postby Tiago Splitter » Tue Nov 05, 2013 11:54 pm

There is no such thing as a mandatory 401k contribution from an employee. If they won't let you opt out, it's either not a 401k plan or it's not a salary deferral at all.

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BVest
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Re: Automatic (forced) 401k contributions

Postby BVest » Wed Nov 06, 2013 12:34 am

Hutz_and_Goodman wrote:
bk1 wrote:
Hutz_and_Goodman wrote:What are the tax implications of 401k contributions? If 8% of $160,000 is contributed per year like $14kish) is this deductible from taxable income?

401k contributions are tax deductible, though of course you do pay taxes when you withdraw.


But is this at the capital gains rate?


No. When distributed, it is all taxed as ordinary income, including the gains in the account. The fact that the gains were on tax-deferred income changes the character of those gains.

dixiecupdrinking
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Re: Automatic (forced) 401k contributions

Postby dixiecupdrinking » Wed Nov 06, 2013 12:40 am

Anonymous User wrote:
Hutz_and_Goodman wrote:What are the tax implications of 401k contributions? If 8% of $160,000 is contributed per year like $14kish) is this deductible from taxable income?


It's tax deductible and you don't even pay FICA taxes since it is forced.

No matching other than them giving me what they save on FICA taxes, which isn't much this year, and is barely 1.45% of whatever they take out after that.

Is this a government job?




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