Safe Harbor and Auto Enrollment

[Guest cydavis]

My company has 140k employees with 40% participation rate. 70% of our employees are hourly. 50% of the hourly employees have not meet the eligibility requirements yet. We also have a Deferred Compensation plan with a 75% participation. I am working on a project whether to add Safe Harbor and/or Auto Enrollment to our plan. I am looking to compare companies in Food/Hospitality industry or companies that have a high turnover rate.

Here are my questions:

1. How has having Auto Enrollment or Safe Harbor affected your participation rate?
   
2. What has been the increased cost to the company with the added match from Safe Harbor?
   
3. What is the percentage of the employees that have stayed in the plan with Auto Enrollment?
   

Thanks for your help!!

[stephen]

While I cannot directly answer your questions it seems to me that a safe harbor plan is a much better fit than auto enrollment. Auto enrollment for low paid participants leads to very small account balances and an increased participant count (that leads to higer plan expenses e.g. 5500 Audits - your reference to having 140k employees leads me to believe that you have 140 employees not 140 participants nor 140,000 employees).

My administration experience has been that safe harbor plans do not necessarily significantly increase participation rates. Thus, you can estimate the cost by calculating the increased match based on your current contributions. You should keep in mind that if a significant number of non-deferring participants begin deferrals due to the increased matching contribtuion that you could face a large contribution increase.

[Guest cydavis]

I am sorry for being unclear. We have over 140,000 employees.

[stephen]

Other than the audit comment as you are already paying for those and this is not an issue for you. I stick by my original post. Please note my comments are based on my working with MUCH smaller plans.

[Guest kjburt]

I am also considering moving my company to Auto Enrollment. I am concerned about the new opt out option and the employees being able to take a distribution in the first 90 days. This seems to add a significant administrative burdern. Do you have a feel for what percentage of employees may end up opting out in the first 90 days?

[J Simmons]

I am also considering moving my company to Auto Enrollment. I am concerned about the new opt out option and the employees being able to take a distribution in the first 90 days. This seems to add a significant administrative burdern. Do you have a feel for what percentage of employees may end up opting out in the first 90 days?

kjburt,

The way I read 414w is that the 90 day retro opt out (and payback) is optional, not required in order to have auto enrollment.

[austin3515]

McDonald's got rid of it for a reason...