auto enroll and rehire

[pmacduff]

Although many are I know - I'm not a big fan of auto enroll, at least not in the small plan market where I live.....

anyway - this hasn't come up before but I have an auto enroll plan where a person was termed and took their balance out & now is rehired without a break-in-service and can/will enter the plan immediately upon rehire.

The client & vendor will send this rehire all of the auto enroll materials and go through that whole process again. Of course the vendor has a timeframe on the auto enroll process in order to give the participant all of the required disclosures and time to opt out, etc.

So this person won't actually begin contributing to the plan upon rehire but some later date that could potentially be as long as a month or more out. Is there an issue with this?

Seems to me (as an example) if the participant had NOT taken distribution of their account then they would simply be reactivated and could contribute as early as their first paycheck after rehire.

thoughts?

[Peter Gulia]

What do the plan documents say?

Does the plan state any provision that precludes an eligible employee, without waiting for an automatic-contribution regime, to submit his or her "affirmative" cash-or-deferred election?

[Mike Preston]

Yes, it is an issue. The vendor should have a re-hire protocol that leads to proper deferrals in the absence of an affirmative election. However, I suppose the vendor can just arrange their normal protocol to include an expected failure in the case of re-hires. In the absence of a match, the self-correction may be limited to a "Notification of BooBoo Being Corrected" ™. Gets kind of messy, though, if there is a match.

[K2retire]

I've heard several vendors express the opinion that there is some sort of legal requirement to allow a full 30 days after mailing a notice before they can begin default deferrals, even for rehires.

[Mike Preston]

I think they just don't want to process any reversals, which the participant is entitled to.