Researchers: Automate 401(k) Enrollment
Automatically enrolling new workers in 401(k) plans can increase 401(k) plan balances significantly, and lower income workers appear to benefit the most.[@@]
Sarah Holden of the Investment Company Institute, Washington, and Jack VanDerhei of the Employee Benefit Research Institute, Washington, today published those conclusions in an analysis of automatic enrollment efforts. The analysis was released by the ICI and EBRI.
“The default contribution rates and investment options set by employers who offer 401(k) plans with automatic enrollment can have a significant impact on participants’ 401(k) accumulations at retirement,” Holden and VanDerhei write in their analysis.
The researchers also find that current 401(k) plan members’ ability to save for retirement depends heavily on whether they will continue to work for employers that sponsor 401(k) plans.