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I opted out of the health insurance with new employer because I have retirement health insurance from ex-employer and the premium is a bit cheaper then with new employer, same coverage. They're putting the premium I would pay for insurance into a 401k and I'd rather have it in my paycheck since it would cover the monthly insurance premium for my retirement insurance.
Do they have to put it in a 401k? I know people who've done this and they get the premium money put in their paychecks instead of a retirement account. We could really use the money that's going into the 401k and we don't need another retirement account.
I suspect the reason they are doing this is because the health insurance and the 401K are tax deductible for the company. If they just give you the money, they have to pay the employer share of the Medicare and potentially Social Security (depending on how much you make) taxes so instead of that amount being a write off, it becomes a liability because they have to pay taxes on part of it. It may also affect their Workers Comp and other payroll based insurance if they just give it to you as straight salary.
Your company will know what their policy is... not us!
Yeah I know that and I'm checking on it. I was wondering if anyone else has come across this. The company is saving money by me opting out of their insurance, but they take my money and stick in a stupid 401k that I can't touch without paying a penalty since I'm not 59-1/2 yet. Also, I could end up losing money if the stupid investments go bad, but they still save money on me. Not fair in my book at all!
I suspect the reason they are doing this is because the health insurance and the 401K are tax deductible for the company. If they just give you the money, they have to pay the employer share of the Medicare and potentially Social Security (depending on how much you make) taxes so instead of that amount being a write off, it becomes a liability because they have to pay taxes on part of it. It may also affect their Workers Comp and other payroll based insurance if they just give it to you as straight salary.
Thanks for your response, and that makes sense. It's all to their advantage and my money sits in a stupid retirement account I don't need, I'd like the money. As I said before, I know people who get the premium reimbursed to them in their paycheck, not put in an account. I just found about this because they never stated this happens until I asked if there's any kind of compensation for opting out.
You likely have control over what goes (or what doesn't go ) into your 401K. The company, these days, often defaults an initial contribution amt. However, you can override this default amt to anything you want, including $0.
Contact the 401k adminstrator. It is usually a 3rd party such as Wells Fargo, Fidelity, etc. Your company website or HR person or benefits person will have the contact info for the 401K adminstrator.
Thanks sware2cod, I'm contacting the HR person tomorrow. I also thought I should have control over my own money. I'll find out soon enough.
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