Automatic 401(k) Enrollment: Benefits For Both Employers And Employees — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Automatic 401(k) Enrollment: Benefits For Both Employers And Employees

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in Human Resources,Office Management

Based on current articles in both the popular and business press, it should come as no surprise that Americans are currently not saving adequately to fund their retirement. Legislators have become increasingly concerned, and, with the Pension Protection Act of 2006 (PPA), they took action. Although many employers historically have had automatic enrollment, one of the PPA's provisions encourages employers to enroll their employees automatically in an employer-sponsored 401(k) plan without employees' written authorization.

The new legislation also provides an Employee Retirement Income Security Act (ERISA) preemption to state laws that often prohibit employers from taking paycheck deductions without the employee's written permission, as long as the employer maintains an ERISA-qualified plan and provides notice to employees. The state preemption was previously a barrier to implementing automatic enrollment.

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