Auto Enrollment May Soon be Standard Feature of 401(k) Plans

June 20, 2007 ( - Automatic enrollment continues to gain popularity in 401(k) plans and may soon be the norm, according to results of a survey by the Employee Benefit Research Institute (EBRI) and Mercer Human Resource Consulting.

According to a press release, the survey, which was limited to organizations that sponsor defined benefit (DB) plans in addition to defined contribution (DC) plans, found that 66% of the 163 respondents have either already adopted auto enrollment or are currently considering adding the feature. The adoption rate is lowest among not-for-profit organizations (32%) and highest in the financial/banking industry (88%).

In addition, 48% of respondents have either already adopted auto deferral rate increases or are considering adding this feature, the release said.

“Based on the trends we are seeing, we think automatic enrollment may soon become standard practice among DC plans,” said Dallas Salisbury, president and CEO of EBRI, in the news release.

The survey also found that over one-third (37.6%) of plan sponsors have already added or are planning to add Roth 401(k) accounts to their DC plans. The adoption rate is higher for larger organizations, at 60% for organizations with 25,000 or more employees versus 28% for organizations with under 5,000 employees.

Sponsors were hesitant to add the Roth feature when it first became available in January 2006, but acceptance has increased since the Pension Protection Act removed the feature’s 2010 expiration date.