401khelpcenter.com Logo

COLLECTED WISDOM™ on Automatic 401k Plan Features

This is an archive of information related to 401k automation features like automatic enrollment.

This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.

If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.

To subscribe to our free weekly newsletter, enter your email address below then click the "Join" button.

Email Address:


Auto Drawdown on Way to Becoming New 401k Mainstay

Abstract: Auto enrollment. Auto escalation. The two have worked hand in glove as 401k plan sponsors tried to entice participants to save for retirement. While the twin auto features are mainstays in 401(k) plans, the popular duo soon might be sharing the spotlight with a new rising star: the automatic drawdown.

Source: Pionline.com, January 2019

Five Ideas to Push 401k Auto Innovation Forward

Abstract: Without a doubt, the defined contribution "auto-revolution" has had a major impact on the savings behavior and potential participant outcomes for many retirement savers. A new report details the impact of these plan design elements while offering "five forward-thinking suggestions for how plan sponsors can build upon their plan's existing automatic features and further enhance participant retirement readiness."

Source: 401kspecialistmag.com, December 2018

Why Auto-Enrollment Matters for Plan Sponsors

Abstract: Aside from employee benefit, companies have myriad incentives to give their employees automatic enrollment. Even companies that hold out may soon be legislated to provide it, so companies that implement it now will be ahead of the curve.

Source: Planpilot.com, October 2018

What Is Auto Enrollment?

Abstract: "Auto-enrollment" is a plan design feature that takes advantage of the common human tendency towards inertia to help employees save for retirement and other purposes. In plans where auto enrollment is used, employees do not need to make an affirmative election to participate in an employee benefit plan. Instead, eligible employees are enrolled at a pre-established level of contributions and then allowed to "opt-out" of the default election.

Source: Boutwellfay.com, October 2018

Automatic Enrollment: An Increasingly Available Option With a Large Impact

Abstract: Auto enrollment serves to overcome a worker's inaction, since many workers are stymied by the complex or overwhelming information retirement plans provide. The effect is dramatic: 92 percent of employees participated in auto enrollment plans, with only a small percentage opting out, while only 57% enrolled in voluntary plans.

Source: Forbes.com, September 2018

Automatic Transmission: Does Auto-Enrollment Create Leakage?

Abstract: Most people view automatic enrollment in a 401k as a good thing, but apparently it has a heretofore unappreciated "dark side." At least that was the focus of a headline in a recent Wall Street Journal article that asked (and answered) the provocative question: "401k or ATM? Automated Retirement Savings Prove Easy to Pluck Prematurely."

Source: Asppa-net.org, August 2018

Automatic Enrollment Can Boost Retirement Plan Participation

Abstract: Enrolling new employees automatically increases plan participation dramatically by eliminating the need for action by the worker. A new survey analysis demonstrates that employers and policymakers can encourage workers to save by using automatic enrollment. Survey respondents repeatedly indicated that regardless of whether they have access to an employer-sponsored plan, their perceived motivators and barriers, or the plan sponsor, they would remain in a retirement plan or program and begin saving for their future if automatically enrolled.

Source: Pewtrusts.org, August 2018

Automatic Features in Retirement Plans Boost Retirement Confidence

Abstract: Although 25% of sponsors are not using automatic enrollment due to their fear of participant pushback, 82% of participants are either in favor of or neutral towards automatic enrollment. Among the participants who have been automatically enrolled, 95% are satisfied. Only 1% opted out, and 33% said that if they had not been automatically enrolled, they probably would not have enrolled in the plan. Among those who have been automatically escalated, 97% are satisfied.

Source: Plansponsor.com, August 2018

Retirement Plan Leakage Thwarts Automatic Enrollment

Abstract: With benefits from kick starting retirement savings to fostering participant engagement, automatic enrollment has proven itself to be an important plan feature. Yet, this does not acquit it from including its own set of drawbacks. A TIAA study finds the feature's benefit are continuously offset by pre-retirement withdrawals and plan loans.

Source: Planadviser.com, August 2018

Making Sense of Auto-Enrollment Rules

Abstract: While the IRS means well, when reviewing some of the regulations, one cannot help but wonder if someone was thinking, "How can I make this as difficult to understand as possible?" Such is the case with automatic enrollment.

Source: Cammackretirement.comg, August 2018

Potential vs. Realized Savings Under Automatic Enrollment

Abstract: While automatic enrollment in employer retirement plans has been shown to vastly increase plan participation, many employees tend to withdraw some or all of their account balances before retirement – offsetting automatic enrollment’s positive effect. This study gauges how automatic enrollment influenced savings plan loans and withdrawals at a Fortune 500 financial services firm and how pre-retirement withdrawals affected employees’ retirement plan balances over time.

Source: Tiaainstitute.org, July 2018

Automatic Enrollment in Small-business Plans Is Working

Abstract: Corroborating behavioral finance insights on saving habits, a survey by Vanguard of 8,900 small-business retirement plans found that those having automatic enrollment enjoyed an 83% participation rate, versus 58% for plans with voluntary enrollment. According to the survey, some 63% of employees at businesses that use Vanguard's small-business retirement plan service participated in their 401k plan, versus 61% in 2016.

Source: Investmentnews.com (registration may be required), July 2018

Debt "Limits" -- Causation, Correlation or Coincidence?

Abstract: The "crowding out" concern -- that automatic enrollment would stretch already strained financial resources, particularly among lower-income workers -- has long been a sticking point for those advocating caution regarding automatic enrollment.

Source: Asppa.org, June 2018

The Dirty Little Secret of Auto-Enrollment?

Abstract: Generally, automatic enrollment has been a positive development for retirement plans, as it forces individuals who may not ordinarily save to do so at an important time - the commencement of their working careers. However, auto-enrollment is not a panacea. A new study reveals a potential "dirty little secret" of auto-enrollment; namely, that auto-enrollees incur more debt than non-auto-enrollees.

Source: Cammackretirement.com, May 2018

Automated Processes: Why This Plan Sponsors Moved From Manual

Abstract: Why this 401k plan sponsor moved from manual. After her payroll/401k administrator resigned, the VP of operations of a 62 person company in the Richmond VA area attending a TPSU program was forced to take over. After suffering through the laborious manual processes, she quickly sought help to automate all processes. Watch the video about her experiences and how she plans to use this exercise to better engage senior management.

Source: 401ktv.com, May 2018

Advances in Auto-Services: Reenrollment

Abstract: Despite progress, the first wave of 401k plan auto-services had one inherent flaw: They were only implemented on newly hired, or newly eligible, employees. From a benefits perspective, plan sponsors were still viewing retirement plan participation/enrollment as a point-in-time decision. Several new and more effective auto-services are being discussed by advisors and implemented by plan sponsors. Two of these new services can be used to help optimize employee savings and investment behavior periodically after the point of eligibility.

Source: Troweprice.com, April 2018

PSCA Study Shows Steady Increase in Automatic Features

Abstract: Plans with an automatic enrollment feature nearly doubled over the past decade according to the Plan Sponsor Council of America's 60th Annual Survey of Profit Sharing and 401k Plans. PSCA found 59.7 percent of plans have an automatic enrollment feature in 2016 compared to 35.6 percent in 2007.

Source: Psca.org, March 2018

All Auto Everything, Shlomo Benartzi on 401ks in the Digital Age

Abstract: The famed behavioral economist compares autoenrollment and escalation to autopilot, get the altitude and heading wrong and it's all gonna crash. What's just over the horizon for 401k saving nudges, and what dynamic will digital innovation play? Here's what advisors need to know.

Source: 401kspecialistmag.com, March 2018

Improving Participant Outcomes Through Re-Enrollment

Abstract: A defined contribution plan "re-enrollment" has become a retirement plan industry best practice. This 8-page white paper addresses the most common preconceived notions around re-enrollment's and provides fiduciaries the context, data, and legal support to evolve toward an informed embrace of a re-enrollment's value.

Source: Qualifiedplanadvisors.com, February 2018

PSCA Finds Faster Start for Auto Enroll Programs

Abstract: While the most common default deferral remains 3% of pay (used by 36.4% of plans), more than half of those with automatic enrollment now have a default deferral rate higher than 3%, according to a new survey.

Source: Asppa.org, February 2018

Auto Features May Hold The Key to Improving Plan Participation Rates

Abstract: The Director of Administration of a 50 employee law firm discusses some of the challenges associated with mobilizing the entire workforce around the tax-qualified retirement plan.

Source: 401ktv.com, January 2018

401k Auto-Enrollment Doesn't Stop Workers From Taking on More Debt

Abstract: The auto-enrollment trend has grown increasingly more commonplace in the workforce as companies look for ways to combat growing employee debt, particularly among younger generations (who typically own more student debt, but who also lack extensive financial literacy). But it's not exactly the silver bullet to solving the many complications plaguing retirement overall.

Source: Hrdive.com, January 2018

Major Problem Reported With 401k Auto Enrollment

Abstract: The benefits of automatic enrollment in 401ks are all but a given, and a major reason Richard Thaler, a behavioral economist at the University of Chicago, won last year's Nobel Prize in economics. But now new research has arrived that could wreck it all.

Source: 401kspecialistmag.com, January 2018

Why Auto Portability Makes Everything Better

Abstract: In the realm of retirement savings, auto portability is the public policy equivalent of bacon, great by itself, but even better when mixed with other retirement initiatives. In fact, for many public policy plans to be palatable, auto portability is an essential ingredient.

Source: 401kspecialistmag.com, January 2018

Auto-Enrollment: Elixir and Intoxicant

Abstract: The belle of the retirement plan participation ball is auto enrollment. And a potent tool it is. But a recent article suggests it may not only be an elixir, it may also cause a delayed hangover.

Source: Asppa.org, November 2017

Why Automating Retirement Savings May Not Be Enough

Abstract: Fueled by the popularity of nudging practices, the practice of enrolling employees automatically in retirement savings plans has become widespread in the United States over the past decade. The logic of an automatic retirement savings plan is compelling. However, a majority of people enrolled in automatic retirement savings plans are not saving enough.

Source: Psychologytoday.com, November 2017

Plan Sponsors' Use of Best Practices Continues to Climb

Abstract: Plan sponsors continue to embrace best practices when it comes to running their retirement plan. Automatic enrollment, higher initial deferral rates, and financial counseling are just a few that more employers are adopting.

Source: Planadviser.com, October 2017

The Positive Impact of Automatic Features

Abstract: Automatic plan features offer numerous benefits. These positive impacts occur amidst a backdrop that surprises many employers: employees favor automatic features and appreciate an employer that utilizes them. This 7-page white paper will help employers to strengthen their commitment through a thoughtful and informed automatic enrollment and escalation structure.

Source: Qualifiedplanadvisors.com, August 2017

401k Plan Automatic Enrollment: A Winning Formula

Abstract: Although the number is slowly shrinking, many 401k plan sponsors remain reluctant to institute auto-enrollment and auto-deferral increase features. However, the fact is inescapable: Plans with these features generally have higher participation rates and account balances.

Source: Lindquistcpa.com, June 2017

The Tools Your Retirement Plan May Be Missing: Auto-Enrollment & Auto-Escalation

Abstract: Are you a plan sponsor reviewing your plan and wondering to yourself, "Why is my plan not performing competitively against others," or even more so, "How do I increase employee participation in my retirement plan?" The answer could be, as we will outline in this post, something as simple as adding auto features to your plan design.

Source: Pension-Consultants.com, June 2017

Auto Features: Inertia Beaters, but May Generate Exhaust

Abstract: Automatic features can help overcome saving gridlock, but they are not necessarily a panacea and can have consequences of their own.

Source: Asppa.org, June 2017

Recalibrating Your Defined Contribution Plan

Abstract: Plan sponsors are eager to improve participants' retirement outcomes. Reenrollment is a powerful way to steer employees into effective investment options. However, some plan sponsors have balked at the idea.

Source: Abglobal.com, June 2017

Automatic Savings Plans Drive Better Investment Returns

Abstract: In the U.S., TDFs have consistently had positive gaps because U.S. investors contribute to their 401k savings with every paycheck, and TDFs reduce bad market timing decisions.

Source: Plansponsor.com, June 2017

Millennials Support Automatic Retirement Plans, Seek Sponsor Help

Abstract: The youngest employees and DC plan participants often want more automated features to their plans, and most assign their plan sponsors some responsibility for helping them choose the right investments to fund their retirement while it's still decades away.

Source: Blr.com, April 2017

Adding Automatic Features to Your 401k Retirement Plan

Abstract: This article looks more closely at features such as automatic enrollment and automatic increases or escalation, and hopefully will help you determine whether they are right for your plan.

Source: Belr.com, February 2017

Three Ways to Get an Automatic Enrollment Plan Out of Its Rut

Abstract: Inertia is a powerful force in nature, and in human behavior. Even the most proactive and engaged plan designs (and plan designers) can, over time, slide from being in a groove to being in a rut. Here are three ways to reinvigorate automatic plan designs.

Source: Asppa.org, February 2017

The Next Step for 401k Innovation: Auto-Portability

Abstract: A new "auto" aims to drive retirement savings higher. It's called auto-portability, and it would enable a separating employee to easily roll assets into a new employer's plan. While the notion has been percolating for some time, a growing body of research is highlighting the benefits of consolidating employee assets so they can better grow their retirement nest eggs.

Source: Institutionalinvestor.com, January 2017

Auto-Enrollment Pushes Retirement Plans Higher

Abstract: Plan assets for 401k plans and similar types of defined contribution plans have topped $7 trillion due to continued growth in employee contributions. Part of this increase is not due to employees consciously saving more; it is due to the continued growth of both auto-enrollment and auto-escalation features in a growing number of retirements plans.

Source: Schneiderdowns.com, January 2017

Errors Can Cause Auto Enrollment to Fail

Abstract: By unintentionally overlooking little-known pitfalls, employers can inadvertently create a failure in their automatic enrollment programs.

Source: Ntsa-net.org, December 2016

The Potential Downside of Automatic Enrollment in 401k Plans

Abstract: Automatic enrollment has become a staple of 401k best practices over the past decade, touted to boost important metrics such as plan participation and savings rates among employees. Adoption has more than doubled since 2006, when federal law incentivized employers to use automatic enrollment. Now roughly 52% of all 401k plans use the feature. However, new research suggests the effects of auto enrollment on participants aren't always rosy.

Source: Investmentnews.com (registration may be required), December 2016

Automatic Retirement Plan Features Give Millennials an Early Start

Abstract: As automatic features become more prevalent, a majority of Millennials entering the workforce are enrolled in their employer's plan and begin saving earlier in their career. If they continue to proactively manage their savings strategy, this generation could be in a much better position to fund a comfortable retirement by the time they reach retirement age than those at retirement age today.

Source: Plansponsor.com, November 2016

Twelve Questions Retirement Plan Sponsors Should Ask About Adding an Automatic Enrollment Arrangement

Abstract: This short article deals with 12 common questions around automatic enrollment including, how is the money invested when an employee is auto-enrolled, what are the advantages and disadvantages of automatic enrollment for the plan sponsor, and how does a plan sponsor establish automatic enrollment and automatic escalation in their retirement plan?

Source: Strategicbenefitservices.com, November 2016

Automatic Enrollment 401k Plans for Small Businesses

Abstract: Approximately 30 percent of eligible workers do not participate in their employer's 401k-type plan. Studies suggest that automatic enrollment plans could reduce this rate to less than 15 percent, significantly increasing retirement savings. This 22-page IRS publication provides an overview of automatic enrollment 401k plans.

Source: Irs.gov, November 2016

Auto-Escalation Use in 401k Plans Too Low, Northern Trust Report Finds

Abstract: The adoption rate of auto escalation by 401k plans is too low at 32%, said a report issued Monday by Northern Trust Asset Management. Despite the low adoption rate, 66% of participants whose plans lack an auto-escalation feature said "they would likely accept the automatic annual increase," the report said.

Source: Pionline.com, September 2016

Automation Making Huge Retirement Plan Impact

Abstract: Retirement plan participation has increased 19% in the past five years because of design features that make it simple and quick for employees to participate in their workplace retirement plans.

Source: Benefitnews.com, July 2016

Automatic Plan Features in DC Plans: What's in It for Plan Sponsors?

Abstract: This 14-page white paper highlights several potential benefits of automatic plan features to the employer and profiles plan sponsors who have experienced these benefits. Additionally, it provides a roadmap for implementation that suggests strategies a plan sponsor may employ to implement automatic plan features over a multi-year period.

Source: Dciia.org, July 2016

Unintended Consequences Can Result From Job-Jumping Millennials

Abstract: Auto-services are widely touted as positive developments that drive better participant outcomes. Until now, however, they have been deployed on a very company-loyal demographic. How effective are those same services for a generation that changes jobs every few years?

Source: Troweprice.com, July 2016

Managing Plan Costs in Automatic Programs

Abstract: Plan sponsors today are faced with unprecedented challenges in offering effective retirement plans. Achieving plan objectives in an environment of constrained budgets, talent competition, and increasingly complex fiduciary requirements can sometimes seem like a difficult balancing act. However, with the right combination of plan design and automated program features, retirement plan effectiveness can often be improved within reasonable budget levels.

Source: Troweprice.com, July 2016

Advances in Automatic Savings Program Design

Abstract: Defined contribution plans have experienced significant growth in the adoption of automatic savings programs since the 2006 introduction of the Pension Protection Act. While these programs have generally delivered laudable results, their progress can be hindered by certain plan designs.

Source: Troweprice.com, July 2016

Enhance Investment Behaviors and Outcomes With Re-Enrollment

Abstract: It's become clear that two employee segments have been significantly left out of the impact of auto-features in DC plans, affecting their chance for retirement savings success. Providing access to all employees to engage in the plan, through re-enrollment, can have a significant impact on the success of the plan's objectives.

Source: Pionline.com, May 2016

White Paper Released on Auto Enrollment in 401k and 403(b) Plans

Abstract: Paragon Alliance Group has developed a new white paper that is designed to provide insight into the pros and cons of auto enrollment, and why it may or may not be suitable for all plan sponsors.

Source: 401khelpcenter.com, March 2016

DC Plan Re-Enrollment: A Fiduciary Imperative?

Abstract: This paper looks at the role a re-enrollment campaign can play in guiding all plan participants to an appropriate asset allocation, common reasons cited by plan sponsors for avoiding re-enrollment, and counterpoints to each, key elements of a successful implementation, and re-enrollment terminology.

Source: Russell.com, March 2016

Reshaping Participant Outcomes Through Reenrollment

Abstract: Reenrollment into a low-cost qualified default investment alternative, such as a low-cost target-date series, can rapidly improve diversification and reduce fees for participants -- potentially leading to higher retirement wealth accumulations in the future.

Source: Vanguard.com, March 2016

Automatic Features in Defined Contribution Plans

Abstract: Automatic enrollment, offered in conjunction with automatic escalation, can positively impact participant behavior and improve retirement readiness. This article examines some best practices to be considered when implementing automatic features in defined contribution plans that can produce greater results per dollar of employer cost.

Source: Strategicbenefitservices.com, February 2016

Auto Escalation Beats Inertia, So Why the Hesitancy?

Abstract: While 62 percent of employers with large plans (over $200 million in assets) automatically enroll new employees into their plan, far fewer (48 percent) have adopted automatic escalation. Article reviews so of the reasons employers give for not offering automatic escalation.

Source: Shrm.org, February 2016

'Back-Sweeping' to Boost 401k Participation

Abstract: Aon Hewitt study finds a growing number of companies auto-enrolling, or "back-sweeping," all existing employees who aren't already participating in 401k plans. This practice can certainly have advantages if properly communicated to affected workers, experts say.

Source: Hreonline.com, December 2015

Re-Enrollment: An Easy Button for DC Plans

Abstract: Close your eyes and imagine that there was a button plan sponsors could press that would turn participant inertia into an asset, and help improve sub-optimal asset allocations while simultaneously putting the plan sponsor on more solid fiduciary footing. Luckily there is, it's called re-enrollment.

Source: Manning-Napier.com, December 2015

Understanding Re-Enrollment

Abstract: A plan re-enrollment is a process by which participants are notified that their existing assets and future contributions will be invested in the plan's qualified default investment alternative, unless they make a new investment election during a specified time period. This paper explains the concept of re-enrollment and outlines potential benefits to participants and plan sponsors.

Source: Jpmorganfunds.com, December 2015

The Power of Re-enrollment

Abstract: How can plan sponsors help participants make the most of the sponsor's 401k plan? Re-enrollment is one strategies that takes advantage of inertia -- the same behavior that challenges plan sponsors and participants alike.

Source: Ssga.com, November 2015

The Auto Savings Generation: Steering Millennials to Better Retirement Outcomes

Abstract: Automatic enrollment and the rise of target-date funds are reshaping retirement plan outcomes for all generations. However, these innovations are having the greatest impact on millennials' retirement savings. This 16-page paper highlights some of the generational differences as a result of these changes.

Source: Vanguard.com, October 2015

Automatic Savings Increase Tool Enhances 401k Plan

Abstract: This article discusses how one organization's 401k plan achieved higher employee participation as well as greater savings rates two years after adding automatic contribution increases.

Source: Retirementtownhall.com, September 2015

Automatic Plan Features: Responses to Selected Webcast Q&A

Abstract: DCIIA's Retirement Research Board conducted a webcast to share the results of a research study on plan sponsor attitudes and behaviors regarding automatic plan features. As a supplement to the presentation material used for the discussion, the speakers have answered select questions submitted by the conference call attendees.

Source: Dciia.org, September 2015

Leading the Horses to Water: 401k Plan Re-enrollment and "Backsweeps"

Abstract: While perfect solutions to these problems have yet to be developed, one approach on the savings and investment front that has gained traction in the last ten years is the "lead the horses to water" approach. That is, automatically enrolling employees in a defined contribution plan and then defaulting those who do not otherwise make an affirmative investment election into an appropriate investment fund, subject to opt-out.

Source: Morganlewis.com, September 2015

Another EPCRS Update: Automatic Enrollment

Abstract: Revenue Procedure 2015-27 made several updates to the Employee Plans Compliance Resolution System, or EPCRS, found in Revenue Procedure 2013-12. This article examines the auto-enrollment changes to EPCRS to determine their impact on 403(b)/457(b) plan sponsors.

Source: Cammackretirement.com, September 2015

Using Re-enrollment to Improve Asset Allocation

Abstract: Case study on how one group of advisors worked with a plan sponsor to chart a new course for employees, utilizing re-enrollment and automatic features.

Source: Jpmorganfunds.com, August 2015

When Onboarding New Participants, Keep It Simple

Abstract: Plan advisers should be wary of potential complications when designing their automatic features. Most retirement plan advisers are looking at what makes the biggest impact in getting people in the plan and new ways to get younger employees engaged with the retirement plan -- and keep them there.

Source: Planadviser.com, August 2015

Automatic Enrollment: Only Part of an Overall Strategy

Abstract: Automatic enrollment is here to stay. It is increasingly popular and sooner or later, it may become the norm in most 401k plans. Regardless of the goals you hope to accomplish, it is important to understand that it often will not achieve the desired result on its own. However, as part of an overall strategy, automatic enrollment can be an effective springboard to improve plan operations and create a culture of savings among employees.

Source: Markleyactuarial.com, July 2015

403(b) Automatic Enrollment Best Practices Guide

Abstract: This new resource offers best practices for 403(b) non-ERISA plans is a comprehensive resource prepared by NTSA. It provides information relevant to all stages of providing auto enrollment of 403(b) participants including what an employer should consider before adopting an auto enrollment plan.

Source: Ntsa-net.org, July 2015

Relationship Between Automatic Enrollment and DC Plan Contributions: Evidence From a National Survey

Abstract: This paper reexamines the determinants of 401k participation and contributions in the presence of automatic enrollment using nationally representative data from the Health and Retirement Study for 2006 through 2012. The results confirm previous findings that automatic enrollment is associated with a higher proportion of workers included in DC plans; however, automatically enrolled workers are less likely to contribute to their DC plans than voluntarily enrolled workers.

Source: Bc.edu, July 2015

Plan Sponsor Survey: Focus on Automatic Plan Features

Abstract: DCIIA recently completed its third biennial survey of DC plan sponsors' use of automatic plan features such as automatic enrollment, automatic contribution escalation and plan reenrollment. This survey of over 450 plan sponsors, ranging from sponsors of the largest plans (over $1 billion) to the smallest (under $5 million), found that the adoption of auto features is having its intended effect: more participants are saving for retirement, and saving at increasingly higher and more meaningful rates.

Source: Dciia.org, June 2015

Another Reason for Auto-Features in DC plans: Cognitive Decline

Abstract: As with many of the other behavioral challenges in DC plan design, part of the answer may lie in auto-features. For example, to the extent that the key financial decisions -- investment strategy and drawdown decisions -- can be specified in advance, the impact of any cognitive decline may be reduced.

Source: Russell.com, May 2015

Mindless Pitfalls: Don't Leave 401k Automatic Enrollment Plans Alone

Abstract: The biggest advantage (and disadvantage) of automatic enrollment is that employees don't have to do anything. It's the essence of automatic enrollment. But it also makes people less responsible for their own retirement decisions. Punam Anand Keller, PhD, Tuck School of Business at Dartmouth discusses barriers to automatic enrollment plans and the solutions to overcome them.

Source: Invesco.com, March 2015

Auto Enrollment - Unforeseen Admin Costs Attributable to Small Account Balances

Abstract: An experience many plan sponsors encounter following the rollout of a 401k auto enrollment campaign is an increase in the number of non-participating individuals with relatively small account balances. These small accounts can significantly impact the costs of plan administration. With sufficient planning, auto enroll can be implemented without drastically altering costs, but what can be done when it's too late and the growth of small account balances begin costing you money?

Source: 5500audit.com, March 2015

The Effects of Automatic Enrollment - A Comprehensive View

Abstract: Automatic enrollment is an optional plan feature in which participants are enrolled into their employer's plan as soon as they are eligible, with the option to opt out. Various studies have shown that automatic enrollment increases plan participation dramatically with very few participants choosing to opt out, but its effect on the plan overall is often overlooked.

Source: Ekonbenefits.com, March 2015

Most Employers Auto-Enroll 401k Participants

Abstract: Most employers now offer automatic features in their 401k plans to ensure that workers are saving enough to receive full company matching contributions over time, according to a survey by the benefits consulting firm Aon Hewitt.

Source: Businessmanagementdaily.com, March 2015

Researchers Find Little Cost Difference From Auto-Enrollment

Abstract: Automatic enrollment is often expected to increase employer compensation costs as previously unenrolled workers start to receive matching retirement plan contributions, but researchers have found this not to be true.

Source: Planadviser.com, March 2015

Companies Are Improving Automatic Features in 401k Plans

Abstract: To improve the long-term financial outlook for workers, a new survey from Aon Hewitt, reveals that the majority of companies now offer automatic features in their 401k plans to ensure that workers are saving enough to receive full company matching contributions over time.

Source: Wolterskluwerlb.com, February 2015

Getting Auto-Enrollment Implementation Right

Abstract: Implementing automatic enrollment without thinking through plan design can result in compliance and administrative issues. Plan failures due to automatic enrollment, either breaking the law or operational failures, happen. So plan sponsors should put language in their plan document that is easy to follow and not burdensome to live with.

Source: Plansponsor.com, February 2015

Automatic Enrollment, Employer Match Rates and Employee Compensation in 401k Plans

Abstract: This study examines the relationship between automatic enrollment and employee compensation. A significant negative correlation exists between the generosity of the employer match structure and the automatic enrollment provision. However, study finds no evidence that total compensation costs or DC costs differ between firms with and without automatic enrollment, and no evidence that DC costs crowd out other forms of compensation.

Source: Ssrn.com, February 2015

401k Automatic Enrollment - Things to Consider

Abstract: At first glance, adding an auto enrollment feature to your Company's 401k Plan appears to be a simple way to increase Plan participation. In practice, there can be some unintended consequences in implementing auto enrollment. This article covers some potential hurdles and adjustments you may want to consider to get the desired effects.

Source: 5500audit.com, February 2015

401k Automation May Have Peaked

Abstract: Automation is a hot topic in defined-contribution plans, but while there has been a steady increase in the adoption of features such as automatic re-enrollment and other automatic plan features, they still haven't reached ubiquity and might never get there. That is one conclusion that can be found in the Callan Investment Institute's "2015 Defined Contribution Trends" study.

Source: Benefitspro.com, January 2015

Automatic Enrollment: The Power of the Default

Abstract: Sponsors can use the inertia inherent in participant retirement savings decisions to improve retirement outcomes in defined contribution plans. This 16 page report provides updated statistics drawn from Vanguard recordkeeping data of the effects of automatic enrollment on participants' saving and investing behaviors.

Source: Vanguard.com, January 2015

401khelpcenter.com, LLC is not the author of the material referenced in this digest unless specifically noted. The material referenced was created, published, maintained, or otherwise posted by institutions or organizations independent of 401khelpcenter.com, LLC. 401khelpcenter.com, LLC does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC.

About | Glossary | Privacy Policy | Terms of Use | Contact Us

Creative Commons License
This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.