Employee Participation Survey

[Guest mr.pension]

Employer is considering setting up a 401k. Plan will be employee only contributions. They want to take a survey of employees to determine potential participation level. Does anyone have a sample form that can be used for this survey? Employer is not willing to consider automatic eenrollment option. Still insists on doing survey of employees. Need help with form, if possible.

[Guest FREE401k]

We don't have a form to use but we would strongly recommend to the client that they auto-enroll people in the 401(k) at the level of contribution they deem appropriate (NOT 2% into money market!). We have used auto enrollment for our clients for over five years now and it always works beautifully.

Some people get all torqued about auto enrollment, bogging down in a thousand details and "what ifs." Remember, though, that auto enrollment is simply a reversal of the usual decision about what happens if the employee doesn't respond to the enrollment information. Instead of taking the punitive response "If we don't hear from you, you ain't in the Plan" auto enrollment takes the generous response "If we don't hear from you, since we believe the Plan is such a great benefit, we'll put you in. But if you don't want in all you have to do is tell us."

That's my two cents worth on this subject! As you can tell I'm a passionate believer in auto enrollment. The purpose of what we're all doing is to help people save for retirement, and one of the best ways they can do that is a 401(k) - but you gotta get them in it.

[Guest pineapple]

I agree with FREE401K that negative enrollment can be beneficial, but I would like to point out one which must be considered. You need to ensure that you do not violate any state payroll laws by instituting negative enrollment. Many states, Hawaii included, do not allow employers to arbitrarily withhold amounts from employees paychecks. I am aware of one firm which has requested a ruling from the DOL on this matter, but I do not believe the DOL has issued anything.

Other than that, I too believe that negative enrollment can be a useful tool.

[Kirk Maldonado]

My recollection is that DOL Advisory Opinion 94-27A holds that New York's state laws regarding payroll withholding are preempted.

[david rigby]

Interesting. The fact set in that Opinion (read it here) originated by comparing the requirement of "written" authorization with electronic authorization.

My non-lawyer view is that the DOL did a stretch to reach their conclusion. They certainly went beyond the original fact set. My paraphrase of the DOL holding is effectively stating that state labor law(s) may impose no restrictions on payroll functions if it touches an employee benefit plan. Seems (to me) a bit on the ridiculous side.

Kirk, you da lawyer. What is your view of that Opinion? (and for that matter, of my opinion)?

[Guest FREE401k]

Regarding the payroll withholding, our clients amend their employment applications to address this issue. The applications contain a paragraph that says the applicant acknowledges 1) that the positive enrollment feature of the 401(k) has been explained to them, 2) if they are hired they will become eligible to participate on (whatever date), 3) that prior to that date, they will be sent a special pak of enrollment information, 4) that they may elect to not join the Plan, and 5) if they do not respond to the enrollment information they will be enrolled into the Plan at (% of gross pay) into (default investment option) and by signing below they acknowledge, direct and authorize the Plan Sponsor to withhold the default enrollment percent from their pay.