Can an employer deduct their 401k contributions from a profit sharing bonus on a salaried employee if written in the employment contract?

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Can an employer deduct their 401k contributions from a profit sharing bonus on a salaried employee if written in the employment contract?

That is, at year end $10,000 bonus is zeroed out due to employer contribution to 401k throughout the year.

Asked on July 7, 2015 under Employment Labor Law, Arizona

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

There is no legal obligation on employers to 401k contributions, so they can put any terms, conditions, etc. that they like, regarding the amount, the source, repayment of amounts advanced by the company, etc. If there was a written contract stating that company 401k contributions may be recouped from a proft sharing bonus plan, that is legal and enforceable.


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