Posted on Oct 17, 2015
Should companies force their workers to contribute to 401k plans?
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Posted in these groups: 
Retirement
Personal Finance
Retirement Personal Finance
Posted 9 y ago
Responses: 6
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From the article, it sounds like they are doing what LCDR (Join to see) agrees with, which is setting the defaults higher UNLESS YOU OPT OUT. I think this is 100% and a good faith action on the parts of the employers.
I generally prefer opt-in systems, but the employer is damned if they do and damned if they don't. If they have an opt-out system, they are hated on for "taking" the employees money against their will (though all the employee has to do is be aware of the plan options and say "no."). If they have an opt-in system they are hated on because they "didn't help me save for retirement." Given the catch-22, I would go with the thing that is actually objectively better - funding retirement plans.
I generally prefer opt-in systems, but the employer is damned if they do and damned if they don't. If they have an opt-out system, they are hated on for "taking" the employees money against their will (though all the employee has to do is be aware of the plan options and say "no."). If they have an opt-in system they are hated on because they "didn't help me save for retirement." Given the catch-22, I would go with the thing that is actually objectively better - funding retirement plans.
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No. The process and benefits should be very clear including matching contributions, and having it set to a default unless you change it is fine, but forcing is wrong.
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1SG (Join to see) When you say people miss out on a good thing because they don't understand- you are so right! I had to pay for such advice. Once I understood, I became a sharing proponent of the plan available at my place of employment.
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1SG (Join to see)
CSM Charles Hayden I wish the TSP had matching contributions for Servicemembers! It's only offered to the federal civilians right now.
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1SG (Join to see)
CSM Charles Hayden - Negative the payout depends on the fund you invest it. The safest fund only gets you 4% interest. The others have higher returns but come with risk of loss as well. But the only money you have it what you put in. Federal employees get matching contributions up to 8% I believe. That option is not available for military though.
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MAJ Hugh Blanchard
I'm not much into forcing people to do anything. But I think that companies have the obligation to thoroughly explain what the 401(k) or other retirement plan could mean to their employees, especially if there is a company matching donation available. We're not teaching our young people how to save and invest, and that is a huge mistake.
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I agree with COL Vincent Stoneking , it's better to error in favor of the employee by setting the savings to default on and highest level. They can always change their mind later and roll the money over to another retirement account. Too often, people feel like they missed the boat on a good thing because they didn't understand or someone didn't inform them. This will prevent it and come on, does it really hurt them to be forced to save some money? It's not like they don't have a choice, they just have to pay attention during the in-processing with HR.
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No they should not SSgt Alex Robinson. If they are providing matching funds up to a certain percentage the companies should encourage their eligible employees to contribute.
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