How Does 401(k) Auto-Enrollment Relate to the Employer Match and Total Compensation?
The brief’s key findings are:
- 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.