Can a company apply a designated automatic enrollment percentage to all eligible employees(not contributing) and not just newly eligible. Would this cause a problem with those that origianlly chose not to contribute?

If the company forces employees to contribute then the contributions are no longer treated as 401(k) deferrals but instead become mandatory employee contributions. This makes a big difference in that madatory employee contributions are not pre-tax.

I'm pretty sure the OP was referring to regular automatic enrollments, where the participant can opt out if they want to.

I would think you could apply it to everyone, but I just have never looked into it...

According to the speakers at the Corbel conference last week, you can do pretty much anything like this you want. Since they have the option to opt out, nothing is really bad.

You may want to give existing employees who have not elected the opportunity to opt out in advance of implemetation (per Pension Protection Act). Otherwise you could have a HR nightmare on your hands.

In the ASPPA webcast the other day, this was specifically mentioned as a good idea to do. Not mandatory, but you have to balance the risk/reward.