Retirement Plan Auto Features | Auto Enroll | Auto Escalation

Automatic Retirement Plan Features

Do you want a retirement plan design that increases the likelihood for higher participation rates while simplifying employee contributions?  Consider adding the automatic plan design features to your retirement plan.

Automatic Enrollment

Automatic enrollment is an automatic contribution arrangement (ACA) that can be used as a feature in a retirement plan to allow employers to enroll employees in the company’s plan automatically upon meeting eligibility requirements. Approximately 30% of eligible workers do not participate in their employer’s retirement plan. Studies suggest that automatic enrollment could reduce this rate to less than 15%, significantly increasing retirement savings. Whether you already have a retirement plan or are considering starting one, automatic enrollment offers many advantages.

  • Increases plan participation among both non-highly compensated employees (NHCEs) and highly compensated employees (HCEs).
  • Allows for salary deferrals into certain plan investments if employees do not select their own investments.
  • Simplifies selection of investments appropriate for long-term retirement savings for participants.
  • Helps employees begin saving for their future.

Automatic Escalation

In conjunction with automatic enrollment, automatic escalation is another plan design option which may be added to a retirement plan. Automatic escalation allows a plan sponsor to increase participant deferrals annually by a set increment, most commonly 1%. Plan sponsors electing this design feature typically do so to assist their employees with retirement readiness.

  • Increases contribution rates for both non-highly compensated employees (NHCEs) and highly compensated employees (HCEs).
  • Maximizes the number of participants eligible to receive the full employer contribution.
  • Uses behavioral finance principles in support of the participant and their retirement savings outcome.

Investment products 1)Not FDIC Insured 2)Not Guaranteed by Bank 3) May Lose Value

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