Christine Hradsky No Comments

Should Your 401(k) Plan Adopt An Auto-Enrollment Feature?

401(k) Enrollment

Many employers have 401(k) plans with a low participant percentage. Current tax rules make it easy for organization to automatically enroll employees, helping them save for retirement.

Current tax law gives employers encouragement to start automatically enrolling employees for tax-saving 401(k) elective deferral contributions (also called salary reduction contributions). The Pension Protection Act of 2006 removed perceived state-law restrictions and made other changes.

The end result of these changes: Companies adopting auto-enrollment features will have more employees participating. Larger allowable salary reduction contributions can likely be made for higher-paid employees, because lower-paid workers will be contributing more.

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