Automatic Enrollment Implementation
Is automatic enrollment permissible under law?
Yes
Explanation:
All eligible public employees are automatically enrolled in the State of Michigan 401(k) Plan. Contribution rates may differ based on the type of occupation; plans for the state government employees, state police, judges, and public school employees have different features.
Relevant State Laws – Michigan Comp. Laws. Ann. § 38.1139 b
“(1) A public employer may deduct from the compensation of an employee an amount for contribution to an individual account for the employee’s benefit in a plan maintained under section 125, 401(k), 403(b), 408, 408A, or 457 of the internal revenue code of 1986, 26 USC 125, 401, 403, 408, 408A, and 457. A public employer may provide for automatic enrollment of an employee in a plan described in this subsection.
(2) Except as otherwise provided in this subsection, the public employer shall give written notice to a participating employee of any automatic enrollment at least 14 days before the initial deduction is made. The public employer shall include in the notice a description of the benefit the contribution provides and the right of the participating employee to cancel the contribution by instruction to the employer, including the procedure for giving the instruction. This subsection does not apply to a public employer for the purposes of a participating employee’s participation in a plan established under section 1 of 1976 PA 306, MCL 38.1151, that provides for automatic contributions as provided under the internal revenue code of 1986.”