Removing auto enroll and auto-esclate from a 401k Plan

[betsy]

I have a plan that is amending to remove the auto-enroll and auto-escalate feature and the service provider wants to take anyone in the plan at the auto-enroll % and make them 0%.  That seems odd and more work for all.  Seems the provider should leave everyone "as is" as this change is only for newly eligible participants.  Does anyone have any information to share on this. 

[Gilmore]

I don't know if this helps you Betsy, but we had a similar situation in which auto enroll was being removed.  We checked with our document provider who advised that the PA could make the decision on how to handle the default enrolled participants.  In our case, the PA wanted the participants to retain their default enrolled deferral percentages, so the SMM was clear that anyone who was default enrolled would remain in the plan at the same deferral rate unless they made their own election.  Then of course included information on how to make their own election.

You might check with your document or the document provider and see if you have that same ability, then take that to the provider who wants to eliminate the default elections.