Can a workplace offer selective 401k benefits?

January 9, 2008 5:36 AM

Can a workplace (in PA) offer selective 401k benefits?

I started a new job in August 07 with a small company (less than 10 full time employees). The company is in Pennsylvania. When I interviewed for the position, I asked if the company had a 401k plan and was told that they did not. Earlier this week I overheard a co-worker mention to our payroll person that she wanted to change her 401k

Is it legal for a company to offer 401k benefits to some employees and not others? If it's not legal, what is my best bet for approaching my boss (the owner of the company) about this issue? Ideally, I'd like to keep my job (for the time being - this isn't the first shady thing I've encountered with this company) AND get enrolled in the 401k program.

posted by rinosaur to work & money (5 comments total)

They may have once offered a 401k, but discontinued the program. (My benefits are slightly different, though not in such a significant way, than the new people in my company, because they honor what was offered when I was hired.) Also, note that just because they may have offered a 401K doesn't mean that they provided any matching...so you may not be missing out on much.
posted by desuetude at 6:23 AM on January 9

Short answer: yes, they can limit coverage. Here's a link that explains it very well.
posted by uaudio at 6:42 AM on January 9

...but just because they can exclude, doesn't mean they are doing it correctly, nor does it mean its non-discriminatory. The IRS can totally disqualify a plan if its done incorrectly, and there is virtually no way your employer will get caught short of 1. an audit, or 2. an complaint. If you've seen 'shady' things around your workplace, you can oftentimes check the specifics of a company's plan (Form 5500) on freeERISA.com. ERISA is a set of laws that cover employer retirement plans.

Also, a 401(k) isn't the only retirement plan they can offer. Oftentimes when people don't hear the magic words '401(k)' they think there's no retirement plan - but they can offer a SEP or SIMPLE IRA, etc.

Oh, and IANAL.
posted by uaudio at 7:08 AM on January 9

It's also possible she's not talking about an employee-sponsored retirement account, but one she has on her own. She could have payroll set up to divert a fixed percentage or amount of money from her paycheck directly.
posted by NotMyselfRightNow at 8:47 AM on January 9

er, employer-sponsored
posted by NotMyselfRightNow at 8:48 AM on January 9