What challenges should I watch out for with automatic enrollment?

Updated by Richard Phillips, EA, AIFA, CPC, CPFA, QPA, QKA

Automatic enrollment is a great way to increase participation in your plan because your employees are automatically signed up without having to take any action. However, there are a few pitfalls to watch out for.

  • Notice requirements - Automatic contribution arrangements have strict notice requirements so watch out for your notice deadlines. Our team works with you to help meet these deadlines, but there can still be cases where an employee is not given a notice because we did not have a record of the employee in our system.
  • Payroll implementation - Check with your payroll provider to see if they can set up automatic enrollment in your payroll system to eliminate the risk of not setting up employees' 401(k) deferral deductions in a timely manner. If your payroll vendor does not support automatic enrollment, we can still help you administer the deduction updates by sending you email notifications when the deductions need to be set up in your payroll system. However, you will still be responsible for making the payroll system deduction entries.

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