Automatic Enrollment

[Guest Thornton]

Company A wants to begin automatic enrollment on 1/01/08. The automatic enrollment contribution level will be 3%. This is a EACA, not a QACA.

1) Can existing paticipants with completed elections to not defer be enrolled at 3%?

2) Can existing participants deferring less than 3% be automatically be brought up to 3%?

Based on proposed regulations, I say that neither can be done since these two groups of participants have affirmatively elected to participate or to not participate. Howver, I understand the some companies are doing both. Any thoughts?

[JanetM]

Off the cuff, it someone has made a affirmative election to contribute 0%, 1% or 2% I don't think you can put them in for 3%. It would only be for current participant who has made no election at all.

[John Feldt ERPA CPC QPA]

1) Can existing paticipants with completed elections to not defer be enrolled at 3%?

If the election you describe was completed by the employee longer than 30 days before the new automatic enrollment begins, then, yes, the plan may bump them up -- as long as proper notices are provided explaining that they will be automatically enrolled unless they make a new contrary election, how to do so, when their contrary elections need to be done, etc.

2) Can existing participants deferring less than 3% be automatically be brought up to 3%?

Same answer

Anybody else have thoughts on this?

[Tom Poje]

as ASPPA will have a webcast on Automatic Contribution Arrangements on Tuesday, and another one on QDIAs on Wed, my thought is too wait until after I sit on those before I express my 'opinion'. (or if you are a member of ASPPA sign up for the webcast and sit in on the thing)

[david rigby]

While you work on the "can" part of your questions, consider the "should".

Will the sponsor experience another round of the same employees reducing or stopping the deduction (along with its extra paperwork, angry employees, etc)?