<p>I don't know if someone can help me understand this, but I've been talking with my daughter, who has finished her second year of PhD studies.</p>
<p>She just got her paycheck (RA/TA funds), and noticed that a couple hundred dollars had been contributed to "Student TIAA." It comes out of her paycheck. This was set up without her knowledge or consent.</p>
<p>She called the payroll office and discovered that this contribution is mandatory; nor can she control where the funds go (they are in the 2050 Life cycle fund). </p>
<p>She will only have to pay this in the summers or when she isn't taking classes; the payroll office told her that it's because "she wasn't making enough money." She is being paid this summer through the university; during the academic year, she is funded by a government grant.</p>
<p>She and her husband have good savings habits; H contributes to a retirement plan at his job; and they have put money into a Roth-IRA. </p>
<p>Can someone help us understand why the university does this, or what this is all about?</p>
<p>I thought a law or regulation went into affect which requires that companies with 401k plans (and maybe any plan with elective employee contribution) automatically enroll employees in those plans.
She should be able to opt out. The prior method was “opt in” and the infamous “they” determined that not enough people were saving for retirement by not opting in.</p>
<p>I guess I’m curious why your daughter doesn’t want this job benefit. If it’s not a huge amount, this is a great investment in her future which not too many young people think about.</p>
<p>
If so, it must be a very recent law. My son started at his new job last December and he was not automatically enrolled in his 401k. He had to opt in (which took him a couple of months as he was a bit nervous about tying up his money having moved to a new and much mre expensive city).</p>
<p>It’s not a benefit, I don’t think. That is to say, it’s an employee not employer contribution. But I would have thought she would have had to sign a form or something that allowed them to take the money from her paycheck, or told them where to allocate it. </p>
<p>She and her H are contributing to savings and retirement plans, and she’d rather have control over the money and put it where, in the amounts she wants, into a plan of her choosing.</p>
<p>This from the student handbook:</p>
<p>To comply with the Revenue Reconciliation Act of 1990, the following students are required to enroll in the Student Retirement Plan: </p>
<p>Undergraduate Students:
Academic Year: Students enrolled in less than six credits for the academic year
Summer: Students enrolled in less than six credits for the summer (total credit hours of all summer terms).
Student employees whose normal work schedules are 40 or more hours per week (across all jobs at the university) will be subject to student retirement, regardless of the number of credits in which they are enrolled. </p>
<p>Graduate Students:
Academic Year: Students enrolled in less than three academic credit hours
Summer: Students enrolled in less than three credits for the summer (total credit hours of all summer terms).
Student employees whose normal work schedules are 40 or more hours per week (across all jobs at the university) will be subject to student retirement, regardless of the number of credits in which they are enrolled. </p>
<p>She isn’t enrolled in any units this summer. But what is the “Revenue Act,” and why would students be required to enroll in retirement plans, without any opportunity to “opt out” if they had something else (as with insurance, e.g.).</p>
<p>Zetesis,</p>
<p>TIAA-CREF is one of the most solid organizations for retirement funds. Most institutions of higher education use it for their staff retirement accounts. If her university has a policy of automatically enrolling her in it, it really isn’t that bad a deal. Once she separates from the university, she can contact TIAA-CREF, and arrange to shift the account to a different fund, or even to a different institution.</p>
<p>As for why she was automatically enrolled without being given a clear opt-out option, that is something she needs to ask the university benefits office. From what you have posted, it appears that requiring enrollment is simply that university’s policy.</p>
<p>My H and I have our retirement in TIAA-CREF, so I know it well. I’m just trying to understand why this is required at all, why she wouldn’t be given the option to opt out, etc. What’s the rationale for it (“Students don’t think of saving”), esp. if a student does have other savings?</p>
<p>I’ve told my D that it isn’t a bad thing in and of itself; she was just shocked to see the deduction on her recent pay stub without ever having signed any forms, etc.</p>
<p>I think there are some teacher retirement plans that are mandatory and contributions can not be opted out of. Don’t know much about it but I am sure have read this somewhere (doesn’t it replace social security pension in some jobs where it is mandatory - or am I getting confused with something else?). I am surprised that it would apply to a student though.</p>
<p>Too bad they’re not matching her contributions!</p>
<p>Swimcatsmom. You are correct. In some states, contributions to the state teachers retirement is mandatory and you cannot be exempt from it if you are a school teacher in the public schools…no opt out…even if you contribute to SS if your state requires teachers retirement, you must contribute…mandatory.</p>
<p>BUT this doesn’t sound like a public school teaching employee. </p>
<p>I think the OP’s daughter should go and talk to human resources at her job and get this sorted out before her next paycheck is issued.</p>
<p>I know that many public entities require mandatory contributions to retirement - I had to pay even as a substitute teacher. I am guessing this is a public university. Not all publics require contributions, but many do. Florida is currently in discussions regarding mandatory retirement contributions for public school teachers, I believe.</p>