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Retirement Made Simpler News
May 13, 2010
Each issue of Retirement Made Simpler News delivers important news, research, updates and more to your inbox. Meet the Organizations
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Success Story
Case Study
 When Tulalip Tribes of Washington State, a federally-recognized Indian tribe located in the mid-Puget Sound area, began offering automatic enrollment in the employee 401(k) plan, it braced itself for some negative feedback.
The good news is that those complaints never materialized. There was even more good news in the participation numbers. Read the Success Story to find out what happened—and to learn about best practices used by Tulalip Tribes to help employees save.
Success Story
Are You a "Best Practices" Employer?
Plan sponsors that automatically enroll new hires are to be applauded—but is may be time to take further steps to help employees save. Here are four practices that can boost employee savings and participation:
- Include existing employees to your automatic enrollment roster.
- Choose a meaningful default contribution amount such as 6% or more.
- Help employees save more with automatic contribution increases (automatic escalation).
- Consider default options with automatic rebalancing features to keep your employees’ investment allocations on track as they age.
Learn more
Automatic Retirement Features in the News
403(b) Plans Remarkably Healthy After Recession, New Regs
A new survey from the Profit Sharing Council of America (PSCA) of 552 plan sponsors shows sponsors appear to be adjusting well to the new 403(b) regulations. The survey revealed:
- Nearly 57% of plan sponsors made changes to their 403(b) plans because of new regulations.
- 11.5% of plans have an automatic enrollment feature. Automatic enrollment is more prevalent for large plans (21.9% of plans with 1,000 or more participants).
- 43.5% of plans with automatic enrollment have a default deferral of 3% of pay and 19.6% have a default deferral of 2% of pay.
In addition, the most common default option is a target-date fund (38.8% of plans). This is a shift from the most common default option in 2007, which was a money market fund (30.2% of plans).
Overall participation rate for employees eligible to participate in a 403(b) plan remained unchanged from the 2008 survey (75.8%).
Read the Release
Want News about Automatic 401(k)s and more? Visit the RMS Media Stream
New Research
401(k) Savings 2010—Balances Recovering but Still Short of Pre-Recession Levels
Workers were able to recover a significant portion of the losses they sustained in 2008 simply by participating in their 401(k) plan. Key findings from Hewitt Associates’ 2010 Study of 401(k) Saving and Investing:
- The average 401(k) plan balances rose from $57,150 in 2008 to $70,970 in 2009. However, these average balances remain 11% lower than they were in 2007 before the recession ($79,570).
- Among the 58% of employers that automatically enrolled their employees into their 401(k) plan, the majority (69%) defaulted them into a target-date fund.
- Nearly three in ten (28.2%) participants do not contribute enough to their 401(k) to receive their full employer match, which is consistent with 2008 levels.
Learn more
Featured Resources
Automatic 401(k) Toolkit
Automatic 401(k) Directory
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