Automatic Enrollment & Liability

[Guest jhilliard]

I have a client who utilizes the automatic enrollment feature; recently this sponsor was told that this increases the fiduciary's liability. I thought they were covered by ERISA? Are they truly more liable than if they did not use automatic enrollment? Any articles that I can share with them to ease their pains would be appreciated.

Thanks in advance for your thoughts.

[R. Butler]

Automatic Enrollment is permissable (see Rev. Rul. 2000-8), but that doesn't mean that there won't be exposure to possible liability. Most concerns that I've read involve:

1. State payroll withholding laws.

2. Fiduciary responsibility for investments if participant doesn't make an affirmative election (see Rev. Rul. 2000-8).

3. There are Notice requirements that the Plan Sponsor must meet.

[Guest jhilliard]

R. Butler - Where can I see Rev. Rul. 2000-8?

J-

[R. Butler]

I e-mailed a copy to you. If you didn't get it you can search Benefitslink using IRS source documents link & find it easy enough.

[Brian Gallagher]

When a person is automatically enrolled, contributions may go to a default investment. Would there be a compliance issue with 404© and the participant investment direction piece of it? Therein would lie some fiducuiary laibility.