The Plan Sponsor Council of America’s newest annual report shows that in 2015, 25.5% of small 401(k) plans offer automatic enrollment. In their survey, small plans are considered plans with less than 50 participants.
While the typical default rate of automatic enrollment is 3%, 51.6% of automatic enrollment plans have a default rate greater than 3%.
For smaller plans that don’t have a safe harbor plan design and have potential plan testing issues, automatic enrollment is a no brainer since it helps boost the deferral rate for non-highly compensated employees and the rues concerning them give enough liability protection for plan sponsors to offer them.
