Automatic Enrollment Implementation
Is automatic enrollment permissible under law?
Yes
Explanation:
The Georgia State Employees’ Pension and Savings Plan automatically enrolls state employees in a 401(k) Plan. New employees hired on or after July 1, 2014 are automatically enrolled in the 401(k) Plan at 5%, while those hired prior to July 1, 2014 were enrolled at 1%. The state also offers a match to those enrolled in the plan, as described in the laws below. Local governments can opt-in to the automatic enrollment system.
Relevant State Laws – Ga. Code Ann. § 45-18-31, § 45-18-36, § 47-2-357
“[t]he state or any county, municipality, or other political subdivision may contract with any employee to defer, in whole or in part, any portion of such employee’s compensation under a deferred compensation plan; and the state, county, municipality, or other political subdivision may provide the deferred compensation plan itself or it may contract with any company qualified to do business in this state to provide such benefits.” Ga. Code Ann. § 45-18-31
“[t]he salary reduction or deductions referred to in [the article including Ga. Code Ann. § 45-18-31] shall be instituted: (1) At the request of the participating employees by the payroll departments applicable to the respective employees; or”, by amendment taking effect May 8, 2018, “(2) Pursuant to an automatic enrollment arrangement permitted by and operated in accordance with applicable federal laws and regulations.” Ga. Code Ann. § 45-18-36
“(b) Each member shall, at the time of becoming a member, be automatically enrolled in the plan; provided, however, that the member shall have a period of 90 days from the date of enrollment to withdraw from the plan. Such withdrawal shall be made in writing to the board of trustees in such form as the board prescribes and any employee account balance shall be returned to the member. Thereafter, participation in the plan shall be voluntary. The member may not withdraw from the plan so long as he or she remains eligible to participate in the 401(k) plan offered by the state.
(c)(1) This paragraph shall apply to persons who became members prior to July 1, 2014. Unless the participating member elects otherwise, the member shall, for each pay period, contribute 1 percent of his or her compensation into his or her 401(k) account. The member may change such level of participation at any time.
(2) This paragraph shall apply to persons who become members on or after July 1, 2014. Unless the participating member elects otherwise, the member shall, for each pay period, contribute 5 percent of his or her compensation into his or her 401(k) account. The member may change such level of participation at any time.
(d) After the participating member has contributed an amount equal to 1 percent of his or her salary into the 401(k) plan for a pay period, the employer shall contribute an equal amount into his or her 401(k) account. Thereafter, the employer shall contribute an amount equal to 50 percent of such amount as the member chooses to contribute for each pay period, up to an additional 2 percent of the member’s compensation. The member may make such additional contributions as he or she desires, subject to limitations imposed by federal law.” Ga. Code Ann. § 47-2-357