Mandatory contribution to 401(k)

[Guest ToddBonham]

I work for a nonunion company that has recently been doing alot of work for the State of Ohio. PW laws require the employer to match wages and benefit dollar amounts. Currently we recieve our hour wage, benefits, and a hourly amount to cover the additional amount in benefits, ($7 to $13 an hour). We just received notice, as of 1/1/10, the company is creating a new 401(k) that all employees will be enrolled in. This is so whenever we are working a prevailing wage job they can contribute this additional money into it and avoid paying taxes on that amount.

First: can a 401(K) be a mandatory contribution?

Second: Can the contribution be tied only to the people working certain jobs?

Third: Can the contribution amount change depending on the job being worked?

Fourth: Can an employer determine the amount of contribution?

[Lou S.]

I work for a nonunion company that has recently been doing alot of work for the State of Ohio. PW laws require the employer to match wages and benefit dollar amounts. Currently we recieve our hour wage, benefits, and a hourly amount to cover the additional amount in benefits, ($7 to $13 an hour). We just received notice, as of 1/1/10, the company is creating a new 401(k) that all employees will be enrolled in. This is so whenever we are working a prevailing wage job they can contribute this additional money into it and avoid paying taxes on that amount.

First: can a 401(K) be a mandatory contribution?

Second: Can the contribution be tied only to the people working certain jobs?

Third: Can the contribution amount change depending on the job being worked?

Fourth: Can an employer determine the amount of contribution?

1. The salary deferral can not be mandatory. However the contributions you are refering to are commonly called Davis-Bacon contributions and are employer contributions not employee deferrals. If you chose to make employee deferrals they would be in addition to the prevailing wage contributions.

2. Yes

3. Yes

4. Sort of, it is usually mandated by the plan doc and the prevailing wage jobs it is attached to. But sometimes there are additional employer contributions that are sometimes offset by prevailing wage contributions.