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Getting Auto-Enrollment Approved Can be a Process


At a TPSU program held at Notre Dame, the CFO of a local manufacturing company attending with almost the entire Investment Committee discusses the process he and the Committee went through to get Auto-Enrollment approved at their company.

When first presented to senior management, there was resistance to auto-enrollment because they felt like it was too coercive. The owner is very patriarchal looking out for employees and he was in particular against it.

But the 401k Committee, comprised of a diverse group of managers and workers, stayed persistent doing their homework, preparing a PowerPoint presentation staying united on their belief that auto-enrollment was needed for their company. Information was the key to getting approval especially comparing the participation and deferral rates of the company which were low compared to national averages.

The owner eventually realized that looking out for employees meant auto-enrolling them, not leaving them to figure it out for themselves.

Important lessons learned from this plan sponsor’s process to get auto-features approved:

  1. Be persistent
  2. Keep a united front
  3. Have a diverse Committee
  4. Prepare a well thought out professional presentation
  5. Use peer comparisons

The CFO had previously attended a TPSU program where the Ideal Plan is always presented which includes auto-enrollment at 6%, auto-escalation to 12%, stretch match and the use of target date funds. Learning what others are doing can be difficult as the professionals running a 401k or 403b plan often do not get the time.

Though education is key, so is the plan’s advisor who, along with serving the plan dealing with any issues, should be bring new ideas like the Ideal Plan to clients and helping them to see how their plan compares to others like them. All of which is important in engaging senior management who are less focused on the company’s retirement plan and more focused on running the business. Tying the two together is key.

Fred Barstein

Fred Barstein

Founder & Editor-in-Chief at 401kTV | TRAU | TPSU
Fred Barstein is the Founder & Editor-in-Chief of 401kTV. Fred is also the Founder and CEO of The Retirement Advisor University (TRAU), a collaboration with UCLA Anderson School of Management Executive Education and The Plan Sponsor University (TPSU).Mr. Barstein was also Founder and Editor-in-Chief of NAPA Net.
Fred Barstein

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