Automatic Enrollment Is On The Rise
Automatic Enrollment Is On The RiseWith the future of social security in question, it is becoming ever increasingly important for workers to self-prepare for post-retirement living. Studies show that approximately one out of every three eligible workers chose NOT to participate in their employer-sponsored 401(k) plan. Offering automatic enrollment in your 401(k) plan is a way for you, as Plan Sponsor, to help lend a hand to employees that are not fully aware of the significance of having a post-retirement source of revenue.
Plans with an automatic enrollment feature nearly doubled over the past decade according to the Plan Sponsor Council of America’s (PSCA) 60th Annual Survey of Profit-Sharing and 401(k) Plans. PSCA, part of the American Retirement Association, found that 59.7 percent of plans had an automatic enrollment feature in 2016 compared to 35.6 percent in 2007. Having an automatic enrollment provision can also help allow Highly Compensated Employees (HCE’s) contribute more to the plan by either boosting the participation rate of Non-Highly Compensated Employees (NHCE’s) or by satisfying the Safe Harbor requirements which exempt the plan from certain nondiscrimination testing.
Check out this edition of Benefit Insights, a non-technical review of qualified retirement plan legislative and administrative issues to learn more.
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