401k opt out

Is anyone aware of any circumstances where an organization can deny a written opt out request from a 401k play with automatic enrollment?


  • 8 Comments sorted by Votes Date Added
  • I don't know how that could be legal. You can't take anything out of my check that I don't want you to, and by option out I am telling you that I don't want 401k taken out. I don't see how you could legally ignore it.
  • Thank you. I didn't think it was legal, but I could have been wrong. I asked out of curiousity because one of our newer employees, who came from a very LARGE employer told me she was not allowed to opt out. I suggested that perhaps it wasn't a 401k, but she said it was and that she had the denial in writing. Apparently a few other ex-employees are trying to get her to go in with them to sue this employer because of it. I will do my best to stay clear, but just wanted to satisfy myself that this big company did, in fact, do a serious oops.
  • You're welcome, Nae. I had a very wise person tell me once that it didn't really matter how much you know, as long as you know where to find the answers. See, we both do. :D
  • I'm going to speculate that this employee may have misunderstood or miscommunicated the situation...

    Companies with auto-enroll choose to have - or not have - a specific period during which an employee can opt out and have contributions returned to them. Once that period is over, you cannot opt out of the plan - but you can stop new contributions. You could, I suppose, take that a step further and have a penalized distribution as well.

    I think we have all had employees who would receive a notice that said "You missed your deadline to opt out - here are your options..." and read it to mean "You are required to participate in our 401k."
  • Thank you Frank. Frankly, (hehe) that makes more sense to me. I know several of the HR people at that large corporation, and none of them are dummies.
  • My specialty is discovering the many ways employees can mess up our lives.
  • I suspect Frank is right.....AGAIN.... The employee(s) probably missed the open enrollment period established by the company and now they are stuck.....HR personel have too many hats to wear to hold anyone's hand.....although many times we do!

    We do not have a time period in which the employee can increase,decrease, or stop contribution into the plan, but we are seriously thinking about establishing one. Why? Because some employees change their contribution so often, it becomes a nightmare for HR and payroll. Sometimes it's a last minute change and we are expected to jump through hoops to "get er done."
Sign In or Register to comment.