DRS Email 16-014 DCP Percentage Deferrals and Optional Automatic Enrollment

Notice No.: 16-014
Date: Aug. 26, 2016
Applies to: Local Government Employers
Subject: DRS Email 16-014, DCP Percentage Deferrals and Optional Automatic Enrollment


As you may know, 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.

You are not required to participate in automatic enrollment. However, DRS would like you to know a few things:

  1. You will continue to have the option to make DCP available to your employees, and you may also elect to provide automatic enrollment. Automatic enrollment can help your employees save more for retirement. In similar efforts nationwide, 80-90% of auto-enrolled employees choose to stay in the savings plan. Contact DRS Employer Support Services to learn more.
  2. DCP enrollment will remain optional for current employees and new employees who are not covered by the automatic enrollment provisions. 
  3. Percentage deferrals will be available to all DCP participants (providing a choice between deferrals by percentage or by dollar amounts). This change will be available ahead of the January 2017 automatic enrollment changes. You will continue to wait for DRS to notify you that an employee has enrolled in DCP, and DRS will continue to report DCP deferrals to your organization with the same method used today. If an employee chooses a percentage deferral, the percentage will be provided for you to calculate the deduction.

Automatic enrollment overview

In organizations that participate in automatic enrollment, any full-time employee newly hired after January 1, 2017 would be enrolled in DCP at a deferral rate of 3% of salary. The contributions would be invested in the retirement strategy fund that assumes the employee will retire at age 65. Employees have the option to cancel participation, or make changes to their monthly deferral amount and investments at any time.

Reporting requirements for automatic enrollment

DRS has prepared detailed information regarding the reporting requirements for organizations that choose to participate in automatic enrollment. For a look at these requirements, see the Automatic Enrollment Questions and Answers.

DRS will continue to report DCP deferral information to employers using the same method as today

When an employee is enrolled in DCP, the deferral information will be listed on the DCP Deferral Amount Change Report/File notifying your organization to begin deferrals. An employee is not considered a participant in DCP until DRS has reported deferral information to you.

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.