Auto-enrollment and your job: What you need to know about 401(k) retirement plans

If your job offers 401(k) retirement plans, pay close attention to company communications.

Starting earlier this year, many companies are now required to auto-enroll employees into 401(k) retirement plans – even if you’ve previously opted out.

This change is due to the SECURE 2.0 Act and is geared towards helping more American workers safe for retirement.

Here’s what you need to know:

Can I opt out of this if I’m auto-enrolled? The answer is yes. You aren’t forced to sign up and you can opt out. Employers have been able to auto-enroll for several years but now many will be required to do so.
What about my contribution amount? The SECURE 2.0 Act has a provision for something called automatic escalation, meaning your contributions are set to increase annually. So if you started saving 3 percent, it will go up each year by 1 percent. You don’t have to keep this percentage – you can opt out of it as well.
What is the reason behind this? The SECURE 2.0 Act is to make it easier for folks to save for retirement and the fact is, many Americans haven’t signed up for 401(k) retirement plans – missing out on years of saving. With auto-enrollment, more workers will have an account to save.
How do I opt out? If you are automatically enrolled, you can always opt out. You should be notified by your employer about the auto enrollment and then if you decide you don’t want a 401(k), you can opt out. You can also opt out of the automatic escalation portion of the plan as well, if you think it is too much.

It’s important to review communications sent by your employer – and learn all you can so you can meet (or even exceed) your retirement goals.

Do you still have questions?

If you have other questions about retirement plan loans, email us or call 937.308.0758.