Plan w/Basic Safe Harbor Match - Can Auto Enroll Be Added Mid-year?

[Mr401k]

A calendar year plan (12/31 PYE) has paid the Basic Safe Harbor Match for a few years. Very recently the decision was made to implement auto enrollment; it will only be applied to employees hired on or after the amendment's effective date. Since there's not enough time to process an amendment and distribute ACA notices for a 1/1 effective date, the auto enroll would need to be implemented at some other time...probably February 1. But can a Safe Harbor plan do this?

[Lou S.]

I'm not 100% sure but I think the answer is no as it would change the information in the previously distributed safe harbor notices.

[Mr401k]

Even though the only people impacted by Auto Enrollment would be employees hired on some future date...employees who never received the original Notice anyway?

[austin3515]

I think this is another example of how ridiculous the IRS position on this is. Personally, it does not bother me in the least because this can only INCREASE a participant's own savings and INCREASE their match. To prohibit this is so contrary to obvious public policy it is ludicrous. I would love see the headlines. "IRS disqualifies plan for adding auto enrollment and dramatically increasing the retirement readiness of their employees."

Could you imagine??

This falls in the same camp as amending the plan to eliminate a 1 year wait for the plan. I truly think prohibiting these sorts of changes is so bass ackwards it's not funny. It's downright scary.

[rcline46]

Remember that the '30 day' is not what you think. The rule is that you must give notices within a 'reasonable' period, and 30 days is considered 'reasonable'. this does not rule out other timing to be reasonable under the circumstances. If questioned you will have to defend other timing.