Automatic enrollment

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Automatic Enrollment

An employer-sponsored retirement plan in which the employer is able to enroll an employee without that employee's express authorization. The employer determines what percentage of the employee's salary or wages is contributed to the plan. The employee is able to change this percentage and can even refuse enrollment in the plan, but he/she must do so in writing.

Automatic enrollment.

Your employer has the right to sign you up for your company's 401(k) plan, in what's known as an automatic enrollment. If you don't want to participate, you must refuse, in writing, to be part of the plan.

In an automatic enrollment, the company determines the percentage of earnings you contribute and how your contribution is invested, choosing among a number of potential alternatives. You have the right to change either or both of those choices if you stay in the plan.

References in periodicals archive ?
According to the SDRS, this gradual adoption has been useful, as the process of introducing automatic enrollments requires each unit to restructure its payroll system to allow for automatic deduction of contributions.
These rules, combined with passage of the Pension Protection Act of 2006, have led to an increase in plans automatically enrolling participants, from 1 percent of all plans in 2004 to 16 percent in 2009, with this 16 percent of plans accounting for almost half of all plan participants nationwide) The private sector continues to view automatic enrollment as an important way to encourage employees to save for retirement, a feature that is also receiving increased attention in the public sector.
9 percent of respondents in a survey of state and local governments reported that their governmental unit has instituted some form of automatic enrollment feature in its defined contribution retirement plan.
Assessing the importance of automatic enrollment in the SRP requires knowledge of the total package of retirement benefits offered to public employees.
Changes included incorporating the need for additional personal saving through the supplemental plan into the SDRS mission statement and adopting automatic enrollment for newly hired employees.
In 2008, the legislature passed a bill authorizing automatic enrollment so newly hired employees would be enrolled in the SRP at a minimum contribution of $25 per month.
Automatic Enrollments for Retirement Plans--In an effort to increase participation among company-sponsored retirement plans, PPA allows for the automatic enrollment of plan participants.
While automatic enrollments were available before the PPA, this feature has been expanded and added to ERISA and comes with federal pre-emption of state law, thereby eliminating concerns over California labor law restrictions.
If the automatic enrollment feature of a plan is "qualified" it will be treated as satisfying the annual anti-discrimination testing (ADP/ACP tests), and will be exempt from the top-heavy requirements.
To satisfy the automatic enrollment safe harbor, elective contributions must fall within a range from a minimum contribution of 3 percent up to 10 percent of compensation depending on, and increasing with, the employee's length of participation.
A plan with an automatic enrollment arrangement that is not qualified will be allowed to make ADP/ACP refunds up to six months after the close of the plan year (rather than 2.
These plans must provide a 4 percent of pay automatic enrollment feature and a fully vested 50 percent match on the first 4 percent of pay deferred under the 401(k) component.

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