|
ERISA is a fun law that was passed in 1974, that says in part that your employer can't gently caress you too much or with too little lube when providing you a retirement account, in this specific case a 401k. My wife has a utterly awful and lovely 401k, which I will detail below. One thing I'd like to point out is that it used to be worse. This is actually a significantly improved plan versus the one she had last year. The numbers have been tweaked slightly for anonymization. Lowest expense ratio: 1.42% for Vanguard Small Cap Index (this should be around 0.09%, so over 15 times actual expense ratio) Highest expense ratio: 2.78% They do offer a stable value option without expenses, which offers a guaranteed negative return after other expenses. There's a 2.5% back-end load for everything. There's an additional 0.97% expenses added to everything. There's a flat $58/year in fees as well. Employer matching is discretionary. Employee contribution is mandatory. They will contribute to the fund for you using some bastardized benefits scheme, which for our income, prevents us from contributing to a deductible IRA for her. Edit: Vesting is 0% for three years, then 100% I have saved the best for last. The company is a contractor for the DOL, which is the US department in charge of enforcing ERISA. I'm looking for any advice from anyone who has successfully negotiated the delicate waters of not getting fired while forcing a company to comply with the law. I've already reached out to a few lawyers, and will try to provide details as possible. baquerd fucked around with this message at 18:07 on Apr 20, 2015 |
#
?
Apr 20, 2015 15:44
|
|
|
|
| # ? Apr 19, 2024 00:43 |
|
|
Thanks for posting this thread. Looking forward to following along.baquerd posted:Employer matching is discretionary. What does this mean? Does every employee have their own unique match amount based on performance/whether they slept with the boss/whatever? Or is that every employee gets the same match rate but that changes from cycle to cycle and is not guaranteed?
|
|
#
?
Apr 20, 2015 15:53
|
|
|
pig slut lisa posted:What does this mean? Does every employee have their own unique match amount based on performance/whether they slept with the boss/whatever? Or is that every employee gets the same match rate but that changes from cycle to cycle and is not guaranteed? Every employee gets the same match percentage, which is determined every year. It could be 0% or 10% (yeah right), no one knows until the year is over.
|
|
#
?
Apr 20, 2015 16:28
|
|
|
baquerd posted:Every employee gets the same match percentage, which is determined every year. It could be 0% or 10% (yeah right), no one knows until the year is over. If I had an employer tell me this I'd assume the rate would always be 0. How was the plan worse in the past?
|
|
#
?
Apr 20, 2015 17:18
|
|
|
A GIANT PARSNIP posted:If I had an employer tell me this I'd assume the rate would always be 0. baquerd posted:Employee contribution is mandatory. They will contribute to the fund for you using some bastardized benefits scheme, which for our income, prevents us from contributing to a deductible IRA for her.
|
|
#
?
Apr 20, 2015 17:20
|
|
|
They did actually do a small match last year of a couple percent.A GIANT PARSNIP posted:How was the plan worse in the past? Everything used to be even more expensive. What changed that made me want to take action this year is the benefits kung fu they're pulling that ends up in her making mandatory contributions and preventing us from doing a deductible traditional IRA. Ideally, we'd max out her 401k if she had a reasonable plan, but I need to deduct at least the traditional IRA amount money or I'm losing my ability to do a Roth. quote:My wife just got a new 401k plan. It's literally the worst plan I have ever seen.
|
|
#
?
Apr 20, 2015 18:05
|
|
|
Oh man, that's amazing. You should find a lawyer that's a boglehead and watch his head explode.
|
|
#
?
Apr 20, 2015 18:28
|
|
|
I don't think you can have employee contributions be mandatory. It must be the non discretionary employer match that you are calling the employee contribution. I don't think employee contributions ever need to vest either. I assume you requested the plan document?
|
|
#
?
Apr 20, 2015 18:52
|
|
|
I misread the title of this thread as Eripsa and got excited for a moment 
|
|
#
?
Apr 20, 2015 18:55
|
|
|
Elephanthead posted:I don't think you can have employee contributions be mandatory. It must be the non discretionary employer match that you are calling the employee contribution. I don't think employee contributions ever need to vest either. I assume you requested the plan document? i believe it can be "mandatory" but the employee may opt out. I assume why this is considered "mandatory" is because the employee is not free to change their elections during the year? either way it sounds super sketchy. http://corporate.findlaw.com/corporate-governance/irs-approves-mandatory-401-k-contributions-if-appropriate.html
|
|
#
?
Apr 20, 2015 19:08
|
|
|
Elephanthead posted:I don't think you can have employee contributions be mandatory. It must be the non discretionary employer match that you are calling the employee contribution. I don't think employee contributions ever need to vest either. I assume you requested the plan document? It's technically benefit overflow money. The way this works is that the employee gets a certain amount of benefit money. They then pay for insurance, pre-tax transit, etc. out of this money. Whatever is left, gets put in the 401k, and we've been told there's no way to opt out of this. I've got the plan documents, though I'm not going to make them public, is there something you were interested in?
|
|
#
?
Apr 20, 2015 19:23
|
|
|
baquerd posted:It's technically benefit overflow money. The way this works is that the employee gets a certain amount of benefit money. They then pay for insurance, pre-tax transit, etc. out of this money. Whatever is left, gets put in the 401k, and we've been told there's no way to opt out of this. ok -- so the dollars going to the 401k are in excess of the actual salary? that sounds a lot more reasonable, then. (those fees are still ridiculous though)
|
|
#
?
Apr 20, 2015 20:08
|
|
|
Mr. Glass posted:ok -- so the dollars going to the 401k are in excess of the actual salary? that sounds a lot more reasonable, then. (those fees are still ridiculous though) It's a tiny amount per month (~$10) that is preventing us from properly investing, which is unfortunate. Technically, it's free money, but fees will literally eat the majority of it and I hate to give money to such a crooked system.
|
|
#
?
Apr 20, 2015 20:22
|
|
|
baquerd posted:What changed that made me want to take action this year is the benefits kung fu they're pulling that ends up in her making mandatory contributions and preventing us from doing a deductible traditional IRA baquerd posted:I need to deduct at least the traditional IRA amount money or I'm losing my ability to do a Roth.
|
|
#
?
Apr 20, 2015 20:36
|
|
|
Saint Fu posted:Ok, just so we're clear, you're saying that her being opted into the 401(k) prevents you from deducting contributions to her traditional IRA, right? Yep, those are the IRS rules, so what has to happen now is that we use her 401k to get the proper deductions.
|
|
#
?
Apr 20, 2015 21:09
|
|
|
baquerd posted:Yep, those are the IRS rules, so what has to happen now is that we use her 401k to get the proper deductions.
|
|
#
?
Apr 20, 2015 21:20
|
|
|
Saint Fu posted:I'm not an expert but couldn't you just do a backdoor Roth if you wanted to contribute to a Roth IRA? Unfortunately I've got a large balance in my traditional IRA due to a 401k rollover and the asset allocation wouldn't work out properly to roll that into my current 401k (which is actually pretty great but doesn't have a VNQ equivalent), which would mean that I'd be heavily taxed on the backdoor.
|
|
#
?
Apr 20, 2015 21:25
|
|
|
Gotcha, ok it all makes sense now. You want to lower your MAGI but since your wife has an employer sponsored 401k which you can't opt out of, you're not eligible to deduct contributions to a traditional IRA. Lowering your MAGI through her 401k would suck because the options are terrible. You can't do a backdoor Roth because you have a large existing traditional IRA and presumably you either don't have an employer 401k or you're already maxing it out so you can't reduce your MAGI there either.
|
|
#
?
Apr 20, 2015 21:30
|
|
|
I'd be interested to hear what happens. It sounds like the contributions are technically made by the company, but I don't think that would absolve them of their fiduciary duties under ERISA. The company I work for today provides consulting services to 401(k) plan sponsors. One of the big reasons consulting firms like mine get hired is because ERISA is very strict and the plans want to be sure they are satisfying their duties. Offering low cost funds is basically the starting point. Those fees are beyond anything I've ever seen in the industry.
|
|
#
?
Apr 21, 2015 07:33
|
|
|
So the contributions are left over from a cafeteria plan or cafeteria like plan? Does the plan have other options? Like life insurance? Dental? Lower deductible health insurance? I think your goal should be using up all her benefit money on other items if the 401k is terrible.
|
|
#
?
Apr 21, 2015 14:42
|
|
|
Elephanthead posted:So the contributions are left over from a cafeteria plan or cafeteria like plan? Does the plan have other options? Like life insurance? Dental? Lower deductible health insurance? I think your goal should be using up all her benefit money on other items if the 401k is terrible. We could get a better option there, but then it would dip past the benefits level and we'd actually be paying money for it, and there's no real desire to do so. I heard back from one lawyer, but it seems it would be expensive to bring this and my actual damages are less than clear-cut. My best bet may be to work directly with a nearby DOL EBSA place and bug them until they do something.
|
|
#
?
Apr 21, 2015 15:53
|
|
|
Does your state have any specific regulations on this? A lot of state agencies are easier to work with than the DOL.
|
|
#
?
Apr 21, 2015 16:14
|
|
|
baquerd posted:We could get a better option there, but then it would dip past the benefits level and we'd actually be paying money for it, and there's no real desire to do so. Hey OP, did you contact the EBSA about this yet? I am curious as to how your wife's issue turned out. For what it's worth, I was an intern at the investigative arm of the EBSA for a short time.
|
|
#
?
Jul 22, 2015 22:15
|
|
|
I don't have a problem with anything the OP has described about this plan. Not all jobs are good.
|
|
#
?
Jul 22, 2015 22:34
|
|
|
Elephanthead posted:I don't have a problem with anything the OP has described about this plan. Not all jobs are good. The expense ratios are way out of touch with what is normal. It really has nothing to do with the quality of the job; this is probably due to someone who was delegated a task just not giving a poo poo about setting things up properly. It's not like the employer is "paying less," they are just loving up.
|
|
#
?
Jul 23, 2015 02:28
|
|
|
Vox Nihili posted:Hey OP, did you contact the EBSA about this yet? I am curious as to how your wife's issue turned out. EBSA has been contacted, but they haven't followed up on anything as far as I can tell. Private lawyers aren't interested unless I want to pony up substantial sums out of pocket.
|
|
#
?
Jul 23, 2015 03:44
|
|
|
|
| # ? Apr 19, 2024 00:43 |
|
|
Elephanthead posted:I don't have a problem with anything the OP has described about this plan. Glad to see they're letting you have internet access, Mr Madoff.
|
|
#
?
Jul 23, 2015 12:36
|
|