Automatic Enrollment

Automatic Enrollment is a common 401(k) plan feature intended to encourage all eligible employees to take advantage of their 401(k) benefit. Guideline plans include an “automatic contribution arrangement” (also known as ACA).

With this feature, eligible employees are automatically enrolled in their employer-sponsored Guideline 401(k) plan if they don’t either self-enroll or opt-out by the prescribed deadline. A contribution rate will be set for them by the plan’s Default Contribution Rate as a Pre-Tax or Traditional 401(k) contribution. Automatic contributions will be invested into one of Guideline’s professionally managed portfolios based on their age and estimated time until retirement. These portfolios are Qualified Default Investment Alternatives. Participants can adjust these contribution settings or opt-out, either permanently or temporarily, from the plan at any time by visiting

Remember that Automatic Enrollment will take effect only for individuals who take no action by the deadline provided in the enrollment notices. Employees are of course free to opt out or modify their contribution rate at any time.

If an employee is automatically enrolled, they may be eligible to receive a refund if they did not wish to contribute to the plan at all.

The IRS favors automatic enrollment plans. You may also check out the advantages of automatic enrollment here (for plan sponsors) and here (for plan participants).

Default Contribution Rate

A Default Contribution Rate applies only to eligible employees who do not elect a contribution rate or opt out of participating in the plan prior to the deadline in their onboarding invitation. If an employee self-enrolls in the plan or opts out in time, the Default Contribution Rate will not apply to them.

The plan’s Default Contribution Rate is set forth in your Summary Plan Description. This rate can be as low as 1%. Sponsors can make changes to the plan’s default contribution rate by contacting Guideline Support


Participants Eligible for a Refund

If your plan includes an Eligible Automatic Contribution Arrangement (EACA) provision and a participant is auto-enrolled who does not wish to participate, they may request a refund within 90 days of the first payroll in which an automatic contribution was made. Generally, plans that began after 8/4/17 will include an EACA provision. Please refer to your plan document to see if your plan contains an EACA provision. You may review the automatic enrollment notice for more information about your EACA plan.

Participants who were auto-enrolled can also see if they are eligible for an EACA refund here.

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