Back-sweep of Participants who are contributing

[tuna524]

Question: Can a plan "back-sweep" and automatically enroll participants at 3% if the participant is contributing at 2% and still qualify as an EACA?

Proposed Answer: No. Treas. Reg. 1-414(w)-1(e)(2) defines an ACA as "an arrangement that provides for a cash or deferred election and which specifies that, in the absence of a covered employee's affirmative election, a default election applies under which the employee is treated as having elected to have default elective contributions made on his or her behalf under the plan." Because the participant has made an affirmative election, automatically enrolling him will result in the arrangement not being an EACA.

What are your thoughts?

[K2retire]

Many plan documents allow the employer to choose to automatically enroll only those who have not made an election, only new employees, or employees who have not made an election of at least the automatic enrollment percentage.

What does your document say?

[tuna524]

The document only auto enrolls new employees. I am comfortable with saying that the plan may allow automatic enrollment of employees who have made an election of less than the default percentage. My question is if the plan allows that, will it still be an EACA based on the language I cited to in the original post.