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Consider “Auto-Enrollment” for Your 401k Plan

By February 24, 2020 No Comments

Automatic enrollment is a 401k plan feature whereby employees who do not voluntarily elect to contribute, or do not opt-out, will automatically have contributions deducted from pay at a predetermined rate. As reported last year in the PLANSPONSOR Magazine annual Defined Contribution Plan Survey, 93% of employers agreed they have responsibility to improve employee “financial wellness” . . . but only 26% of small plans (less than $5M in assets) and 47% of medium-sized plans ($5M to $50M) were using auto-enrollment. To encourage auto-enrollment, the tax law changes adopted in December (the SECURE Act) added a tax credit of $500 per year (for three years) for small employers (i.e., up to 100 employees) that adopt an automatic enrollment feature. ACSI (mbrand@acsi-ny.com) is available to help you learn more about auto-enrollment.