Automatic features drive positive 401k engagement

auto features — Image credit: © Artur Szczybylo | Dreamstime.com

Employee participation rates more than double when plans have an auto-enrollment feature. BofA found 84% of employees participate in a 401k when it has auto-enrollment, while only 37% of employees participate in 401k plans without auto-enrollment.

When it comes to default contribution rates, 90% use a default rate of 3% or higher, while only 30% of plans use a default rate of 5% or higher. Of plans with auto-enrollment, 55% also have auto-escalation, and 96% of those increase deferrals at 1% per year.

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Author

Brian Anderson

Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.