How Does 401(k) Auto-Enrollment Relate to the Employer Match and Total Compensation?

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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.