My wife and I stopped for lunch at a drive in restaurant in Seattle. As we were eating our lunch, my wife was reading the bag about the employee benefits that the resturant offered. The benefits seemed very good for a fast food restaurant. But one thing that caught my eye was that employees could contribute to a 401k after they had worked there for one year (pretty common), and were of the age 21 or older. Now this made me scratch my head. Why limit the 401k plans based on age? My wife said that when she managed fast food restaurants that had 401k plans, they also had the age limit. Why restrict to 401k plans to people 21 and older? I can see limiting things like alcohol to people under the age of 21 since mosy of them haven’t learned to be responsible yet. But contributing to a 401k is being responsible, so why not allow 18 years olds to contribute to a retirement plan if they want to? Or a 16 year old? With drinking, a 16 year old might drink and hurt themselves or somebody else. But what harm would contributing to a 401k plan cause?
I am trying to find out if this is a legal requirement, or decided by the individual companies. To me, it just doesn’t make sense.
I am currently 19 years old and have the same question. I really want to start contributing to a 401k with the company I work for but I am not allowed to until I am 21. Why is that?
Comment by David — February 9, 2010 @ 2:03 pm
It is entirely dependent on your company’s 401K plan and rules. There is no regulation that says a company cannot offer a 401K for empolyees under 21 it is just your company’s policy.
You should ask if they would look into changing the policy.
Comment by Anonymous — March 12, 2010 @ 10:30 pm
I am currently working on a senior project for my bachelors degree in Finance, I have been asking this same question for about 5 years now.. I even had a judge for my business law class who was baffled that such a thing exists, I think this is a terrible requirement, I have been considering taking this to a congressman to set a law that does not require age limits for this… were a country of debtors and we want change.
Comment by Brandon — June 3, 2010 @ 1:16 pm
I am currently 20, about to turn 21 in 2 months. I have had a 401(k) since age 18. Actually I believe my company auto-enrolls everyone, you would have to opt out and sign a wavier to NOT have a 401(k). Point being: its definitly not a legal issue, must be company policies.
Comment by Anonymous — April 8, 2011 @ 11:20 am