Wednesday, June 14, 2006

Auto-Pilot 401(k)

AARP provides a summary of the features and benefits of an Auto-Pilot 401(k) Plan. General concerns employers have with these plans are:

  • Fiduciary risk without legislated safe harbors for multi asset class investments
  • Costs of increased enrollment
  • State anti-garnishment laws

Senate and House Pension reform bills currently include a nondiscrimination safe harbor provision for employers that implement specific automatic enrollment features in their 401(k) plans and would remove the antigarnishment to auto-enrollment by amending ERISA to preempt any state law if it would impede an employer’s ability to offer an automatic enrollment feature.


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