Automatic Enrollment

Questions and Answers

The Legislature recently enacted an automatic enrollment provision for the state's Deferred Compensation Program (DCP). Effective January 1, 2017, Engrossed Substitute Senate Bill 5435 will require state agencies and higher education employers to automatically enroll new full-time employees into DCP unless the employee opts out.

Local governments offering DCP are not required to participate in automatic enrollment. However, they can elect to participate. Automatic enrollment can help employees save more for retirement. In similar efforts nationwide, 80-90% of auto-enrolled employees choose to stay in the savings plan.

The following questions and answers share more about how automatic enrollment works.

What are some important time frames?
  • 30 days (30-day opt out period, or 30-day window) the amount of time a new employee has to opt out of DCP without having a deferral. The 30 days begin when the record keeper notifies the new hire about automatic enrollment.
  • 90 days (90-day window, or permissible withdrawal period) the amount of time a new employee has to stop a deferral AND still withdraw any automatic enrollment contributions. The 90 days begin with the first deferral from an employee’s paycheck. At any time within the 90 days, if the employee makes an elective choice for their DCP account, the permissible withdrawal period ends.
What is considered "full-time?"
The definition of “full-time” is at your organization’s discretion.
Are any full-time employees exempt from automatic enrollment?
Yes. Automatic enrollment does not include student employees or retirees returning to work, even if they fit the newly hired/full-time employee status.
How much will the employee contribute with automatic enrollment?
3% of pre-tax income is the default deferral rate. However, an employee may choose to defer a different percentage or set dollar amount at any time after the record keeper sets up their account.
When will employees be automatically enrolled?
When employers have a new hire, they will provide DRS with their information. DRS will pass this information to the record keeper who then sends communication to the new employee. The employee will have 30 days from the date of this communication to opt out of DCP.
When will employees make their first contribution?
Deferrals will begin after the 30-day opt out period or following any elective choice made by the employee. For those who default into DCP, their contributions will begin within a couple payroll periods following the 30-day window.
What is an "elective choice" under automatic enrollment?
If an employee selects an investment option or changes their deferral rate, this is considered an elective choice and it will impact their 30/90-day windows. If they are still in the 30-day opt out period, an elective choice will end the period and they will not have a 90-day permissible withdrawal period. If the election is made during the 90- day window, it will end the employee’s ability to request a permissible withdrawal unless they are setting their contribution amount to zero.
Will contributions be pre or post tax?
DCP contributions are pretax.
Where will the contributions be invested?
If the employee does not make an investment selection, their contributions will be invested in the Retirement Strategy Fund that assumes they will retire at age 65.
What is Retirement Strategy Fund (RSF)?
Retirement Strategy Funds
How can the employee change their contribution amount or investments?
Employees can make these changes online or by phone. Log in to DCP through online account access or call 888-327-5596. Any elective change will cancel the employee’s rights to a permissible withdrawal* under the automatic enrollment rules.
What if the employee doesn’t want to be enrolled?
Newly hired employees can opt out online or by calling 888-327-5596.
If the employee opts out, can they join DCP at a later date?
Yes
*Can the employee get their money back out of DCP if they choose to opt out following the first contribution?
Yes, this is known as the permissible withdrawal period. If the employee makes this choice within 90 days from first deferral date, they may withdraw their automatic enrollment contributions from DCP as long as the record keeper received the request within the 90 days.
How can the employee submit a permissible withdrawal request and is it still subject to tax withholding?
Submit a withdrawal form to the record keeper. The record keeper must receive the withdrawal request by the end of the 90-day window. The form is available online or call the record keeper at 888-327-5596 to request a form. Because the employee contributions are pre-tax dollars, the tax withholding is 10%.
Which employer groups are mandated to participate in automatic enrollment?
Employers who report through HRMS, 10 state commissions that don’t report through HRMS, the State Bar Association and higher education employers.
How will local employers sign up to participate in automatic enrollment?
The project team will develop a modified resolution document for local employers to sign to indicate their election into automatic enrollment for their newly hired employees. The form will be ready for operational use by the end of December.
If local employer elects into automatic enrollment, is it an irrevocable decision?
No. DRS will provide instructions if you choose to opt out in the future.
What are the reporting requirements for automatic enrollment?

If your organization chooses to participate in automatic enrollment, you will report the following employment information for new employees—separate from all other transmittal reporting. Provide the information once per newly hired employee and submit to DRS no later than the last day of the payroll cycle. This format must contain fixed length fields. Numeric data is unsigned and must be zero filled, i.e. July 1, 2016 = 20160701. Alpha data must be left justified and space filled. No contribution data should be sent for D1 until you receive notification the employee is enrolled in DCP.

TRANSACTION-DATE (N8) (Date Sent)
EMPLOYER-DCP-RPT-GRP (A6)
SSN (N9)
MBR-LAST-NAME (A35)
MBR-FIRST-NAME (A35)
MBR-MID-INITIAL (A1)
ADDR1 (A40)
ADDR1 (A35)
CITY (A30)
STATE (A2)
ZIP-CODE (A9)
GENDER-CODE (A1)
BIRTH-DATE (N8)
HIRE-DATE (N8)

Use the following naming convention for the new hire file: [anything.]autoenroll[.file extension] The “anything” section is at the discretion of the employer and could include reporting period The file name should contain no spaces and be no longer than 30 characters If the file is created in Excel, save it with the ‘.csv’ extension Place the new hire file on DRS’ secure file transfer (SFT) location for DRS retrieval.
Who do I contact if I have questions?
For questions about DCP automatic enrollment, call DRS Employer Support Services at 360-664-7200, option 2, or 800-547-6657, option 6 and then 2.