Auto Enrollment - Failure to auto enroll

[52626]

Employer maintains an auto enrollment plan. Using a bundled platform and it was discovered the participants eligible to join the plan effective 1/1/2014 were not provided the auto enrollment information. Platform's position is this can be self-corrected by using the missed deferral opportunity, making the respective match and lost income.

Now for the tricky part, the participants in question all received the auto enrollment information as soon as the error was discovered and the majority of them opted out of the plan. The platform has asked the employer, since the employees have opted out, do they still want to make up the missed contributions for the period January 1 through the date the opt out was execute? Or will the participants who opt out be removed from the missed deferral calculations?

My gut feeling is the employer is on the hook for the missed deferrals even though the employees are now opting out. Since they never completed the form or online form stating they wanted to opt out, I do not see how the employer can take the position, "they more than likely would have opted out all along."

Change to deferrals/investments etc. are to rescind prior elections, my position would be that going forward the election is to not participate in the plan, however, the election can not be retroactive.

Thoughts????

[K2retire]

I agree that they need to receive the QNEC and match.

[BG5150]

This is no different than if the people were not in auto-enroll. Missed is missed.

At least it's only a couple months, right?

Was this the first entry date this happened?

[52626]

correct, tis is the first time and only a couple of months.

What boggles the mind, is the platform ( who shall remain anonymous) even gave the client the option to not include those employees who now elect to opt out.

Saying that, I realize, you never never, take the word of bundled platform, since most of the time, they have no idea what they are talking about when it comes the administration side of the plan!!

Thank You

[austin3515]

Can someone please remind me one more time why I tell clients to avoid auto enrollment at all costs? Every client I have that has gone down that road has gotten rid of it. It's OK for the big nationals with crazy robust HR Systems but for everyone else, it's not a good idea.

[GMK]

^ It's not bad if you're very small. We'll keep auto enrollment. But then we handle the enrollments ourselves and do not rely on outsiders, except to provide the enrollment booklet.