Forums
Automatic enrollment in 403B plan - is this legal?
Benefits & Compensation
Automatic enrollment in 403B plan - is this legal?
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
Hi,
We consistently have trouble getting our staff to enroll in our 403b plan when they become eligible. This means we have to manually accrue the liability for our employer contribution for those
0
Cat:Topic ForumsForum:ForumId52
Cat:Topic ForumsForum:ForumId52Discussion:DiscussionId36198
Forums » Topic Forums » Benefits & Compensation » Automatic enrollment in 403B plan - is this legal?
Forums
»
Topic Forums
»
Benefits & Compensation
»
Automatic enrollment in 403B plan - is this legal?
|
Automatic enrollment in 403B plan - is this legal?
posted at 10/13/2009 2:53 PM EDT
|
Posts: 9
First: 5/6/2009 Last: 9/16/2010 |
Hi,
We consistently have trouble getting our staff to enroll in our 403b plan when they become eligible. This means we have to manually accrue the liability for our employer contribution for those staff (extra work!), AND the liability stays on our books until staff finally sign up and we have a place to send the money. Is there some way we could automatically sign staff up for the plan and simply direct their employer contribution to a cash account in their name through the 403b plan? |
|
|
Automatic enrollment in 403B plan - is this legal?
posted at 10/14/2009 4:36 AM EDT
|
|
Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Definitely for the employER portion. You don't need the employee's permission to do so.
Depending on the way your plan document is written, you may only have a certain amount of time to deposit contributions. It is my understanding that since you have employER contributions, the 403b plan is covered under ERISA...which means VERY strict timing on contributions. Are you sure you are currently meeting those deadlines doing it the way you are? Also if you aren't depositing does that mean the employee is getting no interest on that money? What happens if the employee terminates prior to joining? Are you distributing outside of the plan? Is the employee getting a 1099R for the distribution? Are they being given the right to rollover the money so as to avoid current taxation? (Honestly you might have a plan qualification issue based on how you are currently doing the recordkeeping...do you have a consultant or third party admin? Because I strongly suggest getting help! I come from a 401k background, but what you wrote gives me shivers based on that knowledge) However, I would communicate to the employee that this account exists and get the goodwill that comes from it. And communicate how that employee accesses the balance should he/she leave employment. Otherwise you might find yourself with lots of small balances for terminated employees that forget to change their address/contact information with you. At first I thought you were referencing auto-enrollment for employEE contributions. I know that is available in 401k plans, but not sure about 403b plans. |
Forums » Topic Forums » Benefits & Compensation » Automatic enrollment in 403B plan - is this legal?
