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RCrosby

Can Employer Make 457(B) Participation Mandatory?

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I was hired as a data specialist and database programmer by a public regional high school in Massachusetts in 2001. For the first 3 years I had the normal Social Security deductions taken from my pay and my employer contributed its share. Then, in late 2003, I was told (along with several other non-teaching employees), that I was being switched to a 457(b) plan. I objected strenuously as I immediately realized that the loss of the employer contribution to Social Security represented a loss of future retirement income. My employer told me I had no choice in the matter, that the 457(b) plan was mandatory. Not wanting to become unemployed over this issue and not finding any sources to verify or refute my employer's claim, I gave up objecting.

 

However, I am now about to retire and, when I looked at the amount I am to receive in Social Security benefits, the old anger and disappointment rose up again. I brought the issue up again with the school's payroll/bookkeeper person and she affirmed that the plan was mandatory, but did not offer any proof other than a verbal statement.

 

I tried more online research and found a FAQ from this site that seems says that"...the employee agrees to take a reduction in salary." This sounds to me like the employee has a choice.

 

So, my question is simple: can a public employer make participation in a 457(b) plan mandatory?

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Guest Joel L Frank

If you are not required to join the primary retirement system of the public employer you can be forced to pay 7.5 percent of your salary to your 457(b) Plan in lieu of contributing to Social Security. This allows the public employer to save its match to the SS system. Apparently, you are not required to join the employer's primary retirement plan because you are a non-pedagogue.

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Joel

Thank you for your reply. It is clearer than anything I have heard to date. Where would I find the documents which give my employer legal authority to force me to contribute to the 457(b) plan? Is that authority embedded in the 457(b) enabling statutes? If so, is there a copy of those statutes online? I have looked, but not been successful.

 

Thanks

 

R. Crosby

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Guest Joel L Frank

Joel

Thank you for your reply. It is clearer than anything I have heard to date. Where would I find the documents which give my employer legal authority to force me to contribute to the 457(b) plan? Is that authority embedded in the 457(b) enabling statutes? If so, is there a copy of those statutes online? I have looked, but not been successful.

 

Thanks

 

R. Crosby

 

 

Hi R. Crosby,

 

I urge you to go to benefitslink.com and enter the discussion board for 457 plans. In a couple of hours you will get the answer you can take to the bank.

 

Best,

Joel

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Guest Joel L Frank

Joel

Thank you for your reply. It is clearer than anything I have heard to date. Where would I find the documents which give my employer legal authority to force me to contribute to the 457(b) plan? Is that authority embedded in the 457(b) enabling statutes? If so, is there a copy of those statutes online? I have looked, but not been successful.

 

Thanks

 

R. Crosby

 

 

Hi R. Crosby,

 

I urge you to go to benefitslink.com and enter the discussion board for 457 plans. In a couple of hours you will get the answer you can take to the bank.

 

Best,

Joel

 

 

It is rooted in OBRA of 1990. Mass public schools do not participate in SS---pedagogues have a retirement plan---non pedagogues are not eligible to join the retirement plan---so federal law mandates that you pay into a SS Alternate Plan which is why you are compelled to join the 457(b). Absent OBRA of 1990 you would have no SS credits and no retirement plan credits under your present job.

 

JOEL

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