COLLECTED WISDOM™ On Automatic Enrollment

401k Automatic Enrollment -- What You Need to Know - Summary: The automatic enrollment feature is growing rapidly in popularity. Here is what you need to know and action steps to implement automatic enrollment. Located at: TRI-AD , January 2008. Click on headline for full article.

Measuring the Effectiveness of Automatic Enrollment - Summary: An analysis of about 50 plans adopting automatic enrollment confirms that the feature does improve participation rates, particularly among low-income and younger employees. Located at: Vanguard Center for Retirement Research , January 2008. Click on headline for full article.

Essentials of Automatic Contribution Arrangements - Summary: Practitioners have struggled to understand the differences and similarities between and among the various automatic contribution arrangements. This is a one page comparison of the characteristics of the various arrangements. Located at: Sungard/Relius , January 2008. Click on headline for full article.

IRS Proposes Regulations on Automatic Contribution Arrangements - Summary: The IRS has issued proposed regulations on automatic contribution arrangements under the Pension Protection Act of 2006 (PPA). The proposed regulations address the special 401k nondiscrimination test safe harbor for qualified automatic contribution arrangements. Located at: Watson Wyatt Worldwide, January 2008. Click on headline for full article.

Proposed Rules and Sample Notice Regarding Automatic Enrollment Arrangements - Summary: An overview of these increasingly popular arrangements, as they helped employers increase participation in 401k plans and other programs, and provided a way to encourage employees to save for their retirement. Located at: Dechert LLP , December 2007. Click on headline for full article.

Proposed Regulations for Automatic Contribution Arrangements - Summary: This is a comprehensive overview of the proposed nondiscrimination safe harbor for 401k plans with an automatic contribution arrangement. Located at: Kilpatrick Stockton LLP, November 2007. Click on headline for full article.

Automatic Enrollment Guidance - Summary: On November 7, 2007, the IRS released proposed regulations for automatic contribution arrangements. The regulations may be relied upon pending the issuance of final regulations. This article provides a detailed overview of the proposed regulations. Located at: McKay Hochman, November 2007. Click on headline for full article.

Sample Automatic Enrollment and Default Investment Notice - Summary: To aid plan sponsors in satisfying the requirements of the IRSs proposed regulations for the 2008 plan year – the first plan year that a plan may include a QACA or EACA – the IRS has posted this sample "Automatic Enrollment Notice" that satisfies notice requirements. Located at: IRS , November 2007. Click on headline for full article.

An Overview of Automatic Enrollment - Summary: Overview of automatic enrollment including who are good candidates to adopt the this enrollment feature and what employees should know about automatic enrollment. Located at: Transamerica Center for Retirement Studies, September 2007. Click on headline for full article.

Will Automatic DC Programs Eliminate Need for Education and Advice in the Workplace? - Summary: Given that the Pension Protection Act addresses plan sponsors' primary concerns, do we still need to offer education and advice to employees? Can't we simply auto-enroll, auto-escalate, and auto-allocate, and call it a day—or a decade? Located at: Journal of Financial Planning, September 2007. Click on headline for full article.

Enhancing 401k Value and Participation - Summary: Concerns about low levels of 401k participation and the need to make these plans more valuable to support a range of workforce goals have prompted some employers to enhance their plans by adding automatic features, such as automatic enrollment, escalation, rebalancing of investments, and "lifecycle" funds. To help employers better understand recent trends in 401k design and the pros and cons of automating 401k features, AARP commissioned Towers Perrin to prepare this 2007 report focused on midsize and large U.S. companies. Located at: AARP, July 2007. Click on headline for full article.

Automatic Enrollment: More Choices, More Decisions for Plan Sponsors - Summary: The PPA has provided opportunities which will help participants save more for retirement, simplify the investment process and provide fiduciary relief to plan sponsors. One of those opportunities is automatic enrollment. Many plan sponsors had concerns implementing automatic enrollment and this article dicusses many of those concerns. Located at: ERISA Diagnostics , June 2007. Click on headline for full article.

Automating Your Retirement Plan - Summary: More and more plan sponsors are considering automated components for their retirement plans because they encourage saving, increase participation, and may improve non-discrimination testing results. And now that the Pension Protection Act is law, plan sponsors have even more flexibility to help participants increase their retirement savings. Located at: Schwab Retirement Plan Services , January 2007. Click on headline for full article.

Hewitt Study Reveals Impact of Automatic Enrollment - Summary: Despite increases in employee enrollment rates, quality of participation continues to remain a challenge. Located at: 401khelpcenter.com, November 2006. Click on headline for full article.

Key Provisions of the Pension Protection Act of 2006 - Summary: On August 3, 2006, the Senate passed HR 4, the Pension Protection Act of 2006, by a vote of 93 to 5. Sal L. Tripodi, for ASPPA, has authored this detailed summary of the preliminary review of the 907-page bill including the automatic enrollment provisions. Located at: ASPPA, August 2006. Click on headline for full article.

Capitalizing on Inertia: Automation Boosts Retirement Savings - Summary: This paper provides a survey of academic research that explores the impact of certain plan features that lead to greater participation and contribution rates, and, ultimately, to greater financial security in retirement. Through the design of their DC plans, employers play a critical role in assisting their employees accumulate retirement assets. By understanding the relationship between plan design and observed savings outcomes, employers can alter their plans to help achieve desired results. Located at: TIAA-CREF , June 2006. Click on headline for full article.

Automatic 401k Overview for Employers - Summary: Some employers have taken over the wheel and helped their employees put their retirement plans on "autopilot." The simple approach is an "automatic" 401k sometimes called an autopilot plan. This is a great overview put together by AARP. Located at: AARP, June 2006. Click on headline for full article.

Make It Automatic - Summary: "Automatic" 401k accounts, sometimes called autopilot plans, bypass employee inertia by setting "default" plan participation levels for workers who make no choice about their 401k investing options. CFO magazine senior editor Roy Harris weighs the pros and cons of this approach to boosting retirement saving. Located at: CFO.com, April 2005. Click on headline for full article.

Automating Your Savings Plan to Provide Retirement Security - Summary: Two factors that have the biggest impact on retirement accumulations are how much and how long one saves. Starting early in one's working career and contributing at a meaningful level will greatly affect one's retirement security. But getting employees to embrace this reality has been difficult. Employee inertia is widely reported, and convincing employees to change their current behavior has been a persistent challenge. In this Perspective, Mercer takes a look at some automatic design features as well as other strategies that encourage savings among employees. Located at: Mercer Human Resource Consulting , February 2005. Click on headline for full article.

CRS Report for Congress: Automatic Enrollment in 401k Plans - Summary: Although both automatic enrollment and automatic increases in employee contributions are permissible under federal law, only about 8% of 401k plans have adopted automatic enrollment, and even fewer automatically increase employees' contributions over time. Some financial analysts have suggested that Congress could promote wider adoption of automatic enrollment through legislation. Located at: Congressional Research Service Via ERIC , October 2004. Click on headline for full article.

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