How Does 401(k) Auto-enrollment Relate to the Employer Match and Total Compensation?
Document date: November 11, 2013
Released online: November 13, 2013
While auto-enrollment boosts 401(k) participation, the resulting cost pressure on matching contributions could prompt employers to reduce their match. Analysis using the National Compensation Survey finds that plans with auto-enrollment do have lower match rates than plans without auto-enrollment. This finding suggests that employers may, indeed, be lowering their match rates to keep their total 401(k) costs from rising. Consistent with this notion, a separate analysis found no evidence of higher 401(k) costs for firms with auto-enrollment.
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