Automatic Enrollment Notices

[Guest Grumpy456]

Does anyone know whether the automatic enrollment notice must be provided to (1) every participant in the CODA that includes the automatic enrollment feature or (2) only those participants in the CODA who have not already made an election or opted out?

The IRS model notice suggests that the notice must be provided to (1). Is that right?

How are other practitioners approaching this issue?

Thanks in advance for your help!

[Monica Barnard]

Dear Grumpy - it is my understanding that this notice must be given to all eligible employees and beneficiaries. This notice is similar to the SH 401k notice in that it gives additional, pertinent info, such as changing deferral %, other er contributions, withdrawal rights and vesting, and may also include QDIA language.

Monica

[BG5150]

From the IRS website: http://www.irs.gov/irb/2007-49_IRB/ar15.html

Section 414(w)(4) requires that, within a reasonable period before each plan year, each employee to whom the arrangement applies for such year receive written notice of the employee’s rights and obligations under the arrangement which is sufficiently accurate and comprehensive to apprise the employee of such rights and obligations.

(emphasis mine)

It seems that the notice only go to those who are affected, which to me, means people who have not made an affirmative election and those people who are deferring less than the minimum amount at the time the provision starts. (I think the plan can "bump up" those who aren't deferring the auto-enroll minimum, but I could be wrong.)