Auto enrollment procedures

Just curious if this sounds correct.  If we have a plan with auto-enrollment, we are using our "normal" enrollment forms, normal meaning no auto-enroll language on them.  The individual elects to participate or not.  If the plan sponsor has a newly eligible employee complete this form (yes/no) for enrollment, the auto-enrollment is really a non-issue, correct?  It seems simple to me:  We have the auto-enroll language in the document and SPD, but if we have a clear yes/no from the participant on the form whether they want to participate or not, auto-enrollment is avoided altogether.  

Are we missing anything here?

Thank you

Correct, once some has an affirmative election they are typically done for the year with autoenroll. 

If the plan document has a periodic sweep-in provision they might be subject to it in the future, whereby anyone who is enrolled at less than the auto % has to refill out an election each year, but that provision is specific to each plan.

Plans should be giving an annual automatic enrollment notice to newly eligibility participants and anyone else subject to auto enroll. It might be technically allowed, but I've not seen plans rely on just the SPD to satisfy the auto enroll notice requirement. I see the auto enroll notice done as a separate item, similar to a safe harbor notice, updated and given annually.  I do often see the autoenroll notice combined or given with the QDIA notice. 

If the plan is ERISA-governed and the employer/administrator seeks ERISA’s supersedure of a State’s wage-payment law, that likely requires a notice beyond merely having delivered a less-often-than-yearly summary plan description.

ERISA § 514(e)(3)(A) requires that the plan’s administrator deliver the notice “within a reasonable period before [each] plan year[.]” 29 U.S.C. § 1144(e)(3)(A) http://uscode.house.gov/view.xhtml?req=(title:29%20section:1144%20edition:prelim)%20OR%20(granuleid:USC-prelim-title29-section1144)&f=treesort&edition=prelim&num=0&jumpTo=true.

Likewise, if the plan sponsor or a participating employer wants the arrangement treated as an eligible automatic contribution arrangement, tax law requires a notice before each plan year. I.R.C. (26 U.S.C.) § 414(w)(4) (“before each plan year”); accord 26 C.F.R. § 1.414(w)-1(b)(3)(i) “for a plan year[.]” http://uscode.house.gov/view.xhtml?req=(title:26%20section:414%20edition:prelim)%20OR%20(granuleid:USC-prelim-title26-section414)&f=treesort&edition=prelim&num=0&jumpTo=true; https://www.ecfr.gov/current/title-26/part-1/section-1.414(w)-1#p-1.414(w)-1(b)(3)(i).

Although I might suggest delivering a revised summary plan description before every year, many plans’ administrator don’t use that means of communication.

This is not advice to anyone.

If an individual opts out of auto-enroll right from the start, do they still need to be informed about auto-enroll annually?

Does the plan’s administrator (whether by itself, or with a recordkeeper’s or third-party administrator’s services) make, keep, and maintain records that show for each participant whether her most recent deferral election was an affirmative election or resulted from an implied-assent default? If so, such an administrator might omit sending an ERISA § 514(e)(3)(A) notice to those participants whose deferral is supported by an affirmative election.

But some administrators lack useful (computer system) records to distinguish whether a participant’s deferral results from an affirmative or default election.

And even when the records are maintained and useful, some administrators find that the work of sorting participants would be more expensive or otherwise burdensome than sending a notice to all participants, including those for whom it might not be needed.

Different plans with different needs and circumstances might call for different procedures.

The stakes can be serious. An employer’s violation of an unpreempted State wage-payment law exposes the employer not only to civil consequences, including extra damages, interest, fines, and other penalties but also, under some States’ laws, criminal punishment.

For those and other reasons, an employer might not risk an uncertainty or ambiguity, and might send a yearly ERISA § 514(e)(3)(A) notice to all participants.

This is not advice to anyone.