Wednesday, March 25, 2020

The Biggest Impact on Plan Participation

Did you know that plans with an auto-enrollment feature have an average participation rate of 80%? That’s significantly higher than plans without it. Making salary deferral automatic removes the biggest barrier that prevents your employees from saving: inertia. It’s an easy way for you to help your employees begin their journey to retirement readiness.

Plans that have automatic enrollment can also add automatic increase, a feature that automatically increases employees’ contribution percentage each year. Adding this feature could also reduce your business taxes. Under the SECURE Act—major retirement legislation passed at the end of 2019—small businesses that add certain automatic-enrollment features may be eligible for an annual $500 tax credit for three years. Be sure to consult your tax professional regarding specific considerations and implications for your plan.

How does your plan participation measure up? You can find out quickly by accessing your Plan Health report right from the dashboard of your plan website. 

If your plan doesn’t have an automatic enrollment feature, contact your Client Service Team to discuss implementing this best practice that’s good for your employees—and your plan.

We’ll share additional best practices in future newsletters as part of our ongoing series focused on improving plan participation.