What is automatic enrollment and how does it work?

Research indicates that automatic enrollment is an effective way to get more employees saving for retirement. Automatic enrollment is a common 401(k) plan feature that helps individuals who take no action with regard to plan enrollment to save for retirement. Participants receive a notice of the automatic contribution arrangement prior to the plan start date or the date they are eligible. Participants who do not enroll on their own or opt out of plan participation are automatically enrolled at the plan’s default contribution rate when they become eligible. All Guideline plans include an automatic enrollment feature.

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