Can anyone help with proposed SPD language? - re: automatic 401(k) enrollment

[ERISAatty]

I have been searching in vain for some proposed SPD language to describe a client's automatic enrollment feature for a 401(k) plan. This is a classic "negative election" set up by which a new employee will be automatically deferring a certain percentage of pay into the plan unless they opt out, or opt to raise or lower the percent of elective deferral. Would any of you good, kind people be willing to share, either on the message board or by e-mail, a sample SPD paragraph that you might be using to describe an automatic deferral feature. I would be humbly in your debt.... Thank you in advance.

[ERISAatty]

Lori, thank you very much. I appreciate it!

[david rigby]

Uh.... might that language from BNA be copyrighted material?

Did it come from a website for which you/someone paid an access fee?

[ERISAatty]

pax,

no worries.

After reading the quote, I discovered that the source was the BNA TM portfolio # 351, to which my employer subscribes. And I did not use the language verbatim. I would argue that we're squarely within 'fair use' here.

But, while we're on the topic of automatic 401(k) enrollment, I'm still debating how specific the PLAN needs to be on (1) either the default percentage deferral, or (2) that the plan uses a 'negative' election, which can be opted out of.

This plan formerly did not use the negative election. I think I'm leaning towards amending the plan to describe the negative election feature, but leaving the specific percentage out of the plan, and controlled by the SPD and other Plan Administrative Committee documents.

Any thoughts? Anyone?

[david rigby]

1. Your use of the BNA-produced information was not my concern, but that someone may have put into public domain without authorization. Anyone else have this concern? Anyone care?

2. IMHO (which may not be worth much), a negative election percentage should be specified in the plan document. That said, I wonder if the document could include a range (say 1% to 3%), from which the plan administrator could pick; even if possible, it may not be advisable.

[Harwood]

Isn't the BNA material an election form and NOT language for an SPD? Has the original question been answered?

[g8r]

On the BNA material, I agree that this could be considered a copyright infringement. And, it is a form, not language for the SPD, although much of it could be put into the SPD.

As far as whether the plan should provide the specific %, I'd opt to put it in the plan to be safe. It's unlikely the % will change very often. From a qualification perspective, it's a matter of how strictly the IRS wants to apply the definitely determinable benefits. That seems to depend on who you ask at the IRS.