401K Pension Law
The 401K is considered a personal investment plan and enjoys the protection of pension laws. So, what exactly does this mean? Your 401K contributions are protected against garnishment from people you owe money to. There is one exception, however, and that is child support.
While the 401K plan has many advantages, there are a couple of disadvantages to consider. One disadvantage is that it is not easy to withdraw money prior to age 59 ½. There is a large penalty unless it is for education or emergency. Another disadvantage is that they are not insured by the Pension Benefit Guaranty Corporation.
The Pension Benefit Guaranty Corporation insures pension benefits for a lot of companies. Since the 401K plan is based on mutual funds, you are risking your money just like millions of others on the values of stocks and bonds.
Usually the employee is allowed to choose from a variety of mutual funds in which they can invest the contributions they make to their 401K plan. Typically you may choose from a low risk, medium risk or high risk and allocate a certain percentage to one or all of these funds. Typical investments in a plan include money market funds, bonds, stocks and treasuries. You are allowed to change your investment percentages and deductions at certain times of the year.
The 401K retirement plan is watched over by the government and, in fact, is named for the section of the Internal Revenue Code of 1978 where it is stated and is administered by the Employee Benefits Security Administration - a division of the Department of Labor. That being said, companies have full control over the funds and the investor has many choices on how to invest his retirement savings. It’s a good idea to take full advantage of this plan in order to accrue the most amount of money for your golden years.
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401kinfo4u.com is here to answer the simple questions that you may have about your 401k.
If you are new to a 401k, looking into getting a 401k, or just curious about how it might fit into your retirement package, then you have come to the right place.
is it legal for a company to offer one employee of the same status a 401 k and not offer it to the other(S)??
Joe, that is a tough question to answer. Without knowing all of the specifics of each employees arrangements such as salary and the company benefits, it is hard to say.
If the company that my 401k was with dissolved, how do I get my money or roll my 401k? I have been searching endlessly for information, trying to contact persons I have been directed to with no luck. Numbers disconnected, addresses unknown. Where is my money? It’s been 2 years and I need some answers.
Amanda,
I would check with your state’s treasury office or business filing office to see if they can help. Since most states require that the business file annual reports and such, they might have some information to assist you.
If that doesn’t help, then I would try the State Attorney General’s Office or your local news channel might be interested in your story.