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  1. #1
    Join Date
    Apr 2008
    Posts
    1

    Default Mandatory Contribution To Michigan Retirement Plan (Teachers)?

    My wife is a part time worker at a public school, working only a few hours each week. We just learned that she was enrolled in a mandatory retirement plan. She involuntarily contributes to the plan each pay period, and will not vest unless she has 10 years in the system, which she does not plan to have since she is quitting in a few weeks. The mandatory plan disadvantages us by $1,200 for 2007 taxes.

    I want to get her out of the plan retroactively and get a new W2 for 2007. We have called the school district and they are not helpful at all.

    We agree to forefit the money paid (and money which will be paid), we just want her out of the plan for tax purposes.

    Is it legal for the state of Michigan to force her to participate in the plan? (We don't have paperwork that indicates this.)

    I know this question is similar to the other question about retirement plan, but since it is Michigan and a forced contribution (which we are willing to do without), I thought I would post this question.

    Any ideas how we can get out of the plan for 2007 and 2008?

    Thanks,

  2. #2
    Join Date
    Jun 2006
    Location
    Massachusetts
    Posts
    24,521

    Default Re: Mandatory Contribution To Michigan Retirement Plan (Teachers)?

    You cannot get her out of the plan retroactively. Depending on how the plan document reads, you may or may not be able to stop her contributions for the future. However, under Federal law, money already in the plan is there until, at the very least, she leaves that employer.

  3. #3
    Join Date
    Feb 2008
    Posts
    1,179

    Default Re: Mandatory Contribution To Michigan Retirement Plan (Teachers)?

    I suspect it is a 403(b) plan and yes, they can be mandatory. No they do not have to allow you to (1) stop or (2) get any contributions back. If it is a 401(k) that has automatic enrollment then the statement above is not true. But most (if not all) state teacher retirement plans are 403(b)s not 401(k)s.

    You might ask for a "summary plan description" that should give you more information about the plan.

    Any contributions she puts in will be hers to keep at termination/retirement (plus or minus any investment gains/losses). The vesting refers to contributions made by the employer. If she quites prior to fully vesting, she will lose some or all of the employer contributions.

    I am not sure how it is disadvantageous to you tax wise since that money is pulled pretax and is subtracted out of gross income. Therefore it is not taxed and lowers your AGI. If your AGI is high enough, it can limit tax credits, but again this should be lowering your AGI, not raising it. The only thing I can think of is that it possibly affects her ability to put money into an IRA.

    ETA: http://www.michigan.gov/orsschools/0...456---,00.html

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