Ask what some of the most intractable 401k problems are and you’ll likely hear these three issues:
- enrollment rates are too low,
- savings rates among those who do enroll are too low,
- and investment returns generated by plan participants consistently trail market averages.
As your retirement plan consultant, we are here to help you increase the effectiveness and value of your 401k plan, and one way we are doing this is by advocating the following three “auto” – solutions:
- Automatic Enrollment: Enroll all employees in the plan as soon as they become eligible, unless they take specific action to opt out.
- Automatic Savings Acceleration: Increase participants’ savings rates by a fixed percentage each year, until they hit a specific ceiling, unless they deliberately opt out.
- Automatic Default: Use target-date or lifestyle options, instead of stable value or money market options, as the default for participants who do not select an investment option.
For more information on how the “three autos” drive participant behavior, please contact us.Related Topics
- 401k plan design