Automatic Enrollment Implementation
Is automatic enrollment permissible under law?
Yes
Explanation:
Newly hired State employees who are eligible for Delaware’s 457(b) deferred compensation plan are automatically enrolled unless they affirmatively opt out. The Plans Management Board establishes the default contribution rate (which may not be less than 3%), may implement automatic contribution escalation, and selects the default investment. Employees may change their contribution rate or investment elections at any time and may opt out and request a refund of contributions within the timeframe established by the Board, not to exceed 120 days from the date of employment. Employees covered by a collective bargaining agreement are excluded unless automatic enrollment is expressly authorized by the agreement.
Implementation Status: The legislation has been enacted. Automatic enrollment will become effective following certification that the State’s payroll system upgrades necessary to administer the program have been completed.
Relevant State Laws – Del. Code Title 29, Chapter 60 (§§ 6052, 6055, and 6063)
“A covered employee who does not opt out shall be automatically enrolled into the 457(b) plan at the default rate specified by the Board. The initial default contribution rate may not be less than 3% of compensation. The Board may determine in its discretion to increase the automatic default contribution rate… The maximum default contribution rate established by the Board may not exceed 15% of compensation. A covered employee shall have the right to change the contribution amount or cease participating in the plan… Contributions normally shall start within 90 days of employment… A covered employee who wishes to cease contributions and obtain a refund of amounts contributed to the plan pursuant to automatic enrollment must opt out of the plan… within the deadline established by the Board, which deadline may not exceed 120 days from the date of employment.”