The U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS) have released a new publication to help small employers better understand automatic enrollment for 401(k) plans offered to their employees. The publication, entitled “Automatic Enrollment 401(k) Plans for Small Businesses,” provides a comprehensive overview of the advantages of starting and operating this type of 401(k) arrangement.
While more and more smaller businesses are offering retirement plans, defined contribution schemes have yet to gain a significant foothold in the this segment of corporate America. Many small employers have hesitated to bring such plans on board because of the expenses that plans in general and automatic enrollment in particular entail. In the current economic environment, those doubts are likely to be even stronger, says Fred Barstein, president and CEO of Green Acres, Florida-based 401kExchange.
“One of the inhibitors for any business, particularly small businesses, looking to incorporate automatic enrollment is the requirement for a corresponding match,” Barstein says. “In today’s economic environment, a match is even hard for big companies and extremely tough for small ones.”