Uniform Auto-enrollment

[401kSpecialist]

A client is decreasing their current auto-enrollment rate from 3% to 1% (too many employees opting out at 3%) and adding auto-escalation to the newly covered ACA employees.  (Not a QACA or EACA). They want to:

• Bring in all currently not participating (previously opted out) employees and auto-enroll them at the 1% and escalate them by 1% each year, and
• All future entrants would be auto-enrolled at 1% and escalated by 1% each year, and
• All employees currently automatically enrolled at 3% will stay at the 3% rate and will not be automatically escalated.

Are there any issues with having two different sets of covered employees:  one for employees prior to the new ACA (that do not escalate and are enrolled at 3%) and one for employees after the new ACA (that are enrolled at 1% and subject to escalation)?

[Luke Bailey]

Obviously, this is administratively complex, but I have looked at similar situations before and I don't think there is a legal barrier to doing this.