Automatic Enrollment

[CLE401kGuy]

Outside of being potentially administratively difficult, does anyone see any issues with implementing automatic enrollment for a plan for specific groups of employees - and if yes, which side of being eligible for auto enrollment should the HCE's be - covered by it or not covered by it?

In this situation, the HCE's would be subject to the auto enrollment... and I'm only looking at 1 particular group being excluded from the provision - about 20% of the eligible participants...

Thanks

[GMK]

It's hard for me to see any positives for the plan. What are you trying to accomplish by auto-enrolling 80%, including HCEs, but not this group of NHCEs?

[Belgarath]

Might depend on whether it is an EACA or a QACA.

For the EACA, you don't have to have it cover all employees, as per 1.414(w)-1(b)(1).

For the QACA, I don't saee a similar provision.

I'm not certain whether the IRS might view it as a "benefits, rights, and features" issue requiring testing, but with 80% you would pass that anyway.