Still, fewer than half of employers that offer automatic enrollment also offer such an "automatic escalation" feature.
But the key here is that the employer has to offer both a 401(k) plan and automatic enrollment.
Employers need to be encouraged to institute plan features such as automatic enrollment with opt-out and stepped up contributions.
As with a private sector 401(k) offering automatic enrollment, workers could elect to opt-out and contribute nothing or could contribute a lot more.
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The best hope for turning the trend around, EBRI says, is the automatic enrollment provisions Congress passed in the Pension Protection Act of 2006.
Automatic enrollment of workers into 401(k) programs is one of the few policy ideas that are applauded by both the left and the right.
And we know that by making it easier with automatic enrollment, direct deposit and diversified investment options, people are more likely to build up their nest egg.
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In a strange way, the 401(k)-tapping phenomenon is an unintended consequence of the trend toward automatic enrollment in the plans, designed to get more workers to save for retirement.
Under the new law, if a company uses automatic enrollment and wants to get out of the nondiscrimination test, it need only give a 3% contribution to a worker who saves 5%.
As a recent Financial Engines analysis of more than 2.8 million 401(k) participants found, automatic enrollment is already having an impact on the participation rate, savings and asset allocation of new, primarily younger hires.
On the one hand, he pointed out, thanks to the spread of automatic enrollment in 401(k)s, young workers (or at least those who have regular jobs with benefits) are getting an early start on retirement savings.
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One way to exploit that inertia for a better outcome is automatic enrollment, in which employers default all new workers into the retirement plan unless the workers refuse to participate, which they are free to do at any time.
Indeed, it is not much of a stretch to suggest that these rules are the reason we have seen the widespread adoption over the years of employer matching contributions, automatic enrollment, automatic escalation of contributions, and numerous other innovations in the retirement plan space that have been shown to increase saving.
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Harley owners receive rider-friendly hotel services, automatic upgrade to elite status upon enrollment, and discounted room rates.
The rewards rotate by quarter and enrollment may not be automatic.
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