No one wants to squander an opportunity. Especially when the opportunity comes with very little downside risk or expense. Yet, this month, thousands of employers will again let another opportunity pass them by. This opportunity may be this week for some companies, next week for others or possibly later this month. Many organizations will have the opportunity pass without being fully aware of the opportunity that was available.
The opportunity exists specifically for employers that offer a tax qualified 401(k)plan to the employees; when that plan does not include Automatic Enrollment. The Automatic Enrollment feature, by default, automatically enrolls eligible employees into deferring a portion of their pre-tax compensation into a participant directed retirement savings account.
The opportunity exists every year when the first payroll check of the year is issued to employees. This is the period when almost every employee’s paycheck experiences some type of change due to adjustments in health insurance costs, dependents, tax withholding etc. Employees are conditioned into accepting that change along with the arrival of the first paycheck of each new year. In the first paycheck of every year the ‘take home pay’ is always a little bit different. Therein lies the opportunity for employers to activate the auto enrollment feature into the retirement plan. (Employers always retain the authority to “opt out” of the plan at any time – and some will.)
However, for the much of America’s workforce, the Automatic Enrollment feature will be a very large contributing factor towards the buildup of a future Retirement nest egg.
See related auto-enrollment article
This soon-to-pass opportunity alone would not be a sufficient catalyst alone in having an organization start-up a 401(k) Plan at their company – but for those companies who do offer a 401(k) benefit to employees, the passing of this opportunity during January of 2016 may be reason enough to review the plan documentation to verify that the employer is able to take full advantage of the next pay-period-opportunity – which will reappear during January 2017.
