By Chris Cristallo, CFP® | 401(k) Advisor at BEAM/BGA Wealth
A Seasonal Reminder for Plan Sponsors
October brings pumpkins on porches, children in costumes, and neighborhoods filled with Halloween decorations. It is also a reminder that the year is drawing to a close and that this is the season when many sponsors review their retirement plan design. While haunted houses are optional, automatic enrollment is one feature that deserves serious attention.
Although the SECURE 2.0 mandate beginning in 2025 applies only to new plans, established plans can still capture significant benefits by adopting auto enrollment voluntarily. This fall presents the perfect moment to revisit whether auto enrollment could strengthen participation, reduce compliance concerns, and improve retirement readiness across your workforce.
Why Auto Enrollment is a Treat, not a Trick
For years, plan sponsors have struggled with the challenge of increasing employee participation. Auto enrollment addresses this directly by making saving the default choice. Instead of requiring employees to take the first step, the plan enrolls them automatically unless they actively opt out.
Research demonstrates the impact. Plans with auto enrollment see 37 percent higher participation and are twice as likely to achieve participation rates above 90 percent. Vanguard’s How America Saves 2025 reported that participation in auto-enrolled plans reached 94 percent in 2024 compared with just 64 percent in voluntary plans. Principal research shows that 95 percent of employees remain enrolled once they are automatically included in the plan. That kind of consistency leads to broader participation across demographics, improved nondiscrimination testing results, and greater long-term financial wellness for employees.
Turning Inertia into an Advantage
Human behavior tells us that most people will stay with the default option once it is presented to them. Rather than fighting inertia, plan sponsors can harness it.
- Higher default rates hold. More than 93 percent of employees stay enrolled even when defaults are set at 6 percent or higher.
- Auto escalation builds savings gradually and consistently. Participants nearly double their long-term contribution rates when step-ups are included.
- Re-enrollment brings employees who stopped contributing or mistakenly thought they were participating back into the plan.
Together, this combination of enrollment, escalation, and re-enrollment creates what is often called the “auto features trifecta.” These tools help employees not only start saving but keep saving and ultimately save enough for retirement.
Practical Examples
Company A, a 200-employee manufacturer, introduced auto enrollment at 4 percent with annual 1 percent escalations. Participation increased from 72 percent to 95 percent within one year, and the plan passed nondiscrimination testing without requiring refunds to highly compensated employees.
Company B, a professional services firm, aligned its auto escalation with the company match threshold of 6 percent. Employees reached the full match more quickly, boosting average savings rates without adding employer expense.
Company C, a smaller retailer that was not subject to the SECURE 2.0 mandate, voluntarily adopted auto enrollment at 3 percent. The change reduced administrative burden for HR by limiting repeated education campaigns and opt-in paperwork.
These stories illustrate that employers of all sizes and industries can realize measurable improvements when they embrace auto features. The result is not just stronger compliance but a more confident workforce that feels supported in its long-term financial goals.
An October Checklist for Sponsors
As you review plan design this fall, consider these steps:
- Confirm whether your plan is subject to SECURE 2.0.
- If exempt, consider whether voluntary adoption of auto enrollment could improve participation and testing results.
- Revisit your default deferral rate. Many sponsors now set 6 percent or higher to improve long-term outcomes.
- Coordinate with payroll and recordkeepers to confirm systems support opt outs, escalations, and notices.
- Document committee discussions and decisions to strengthen your fiduciary file.
- Evaluate whether auto increase and annual re-enrollment should complement auto enrollment for maximum impact.
Do Not Be Haunted by Missed Opportunities
Halloween is a time for tricks and treats, but automatic enrollment belongs firmly in the treat category. It is one of the most effective tools available to strengthen participation, improve compliance, and support employee retirement readiness. Even if your plan is exempt from the mandate, auto enrollment can deliver meaningful benefits to both sponsors and participants.
Without strong defaults, too many employees assume they will save later, only to discover that they have lost years of compounding growth. For the employer, this can create longer-term challenges such as delayed retirements, higher benefit costs, and increased workforce management issues. By addressing these challenges today, sponsors position themselves for a healthier, more productive, and more financially secure workforce tomorrow.
This fall, do not let inertia become the ghost that haunts your plan. Instead, embrace automatic enrollment as the feature that protects your employees’ futures and your fiduciary responsibilities. Like candy in a Halloween basket, it is a simple step that provides a lasting reward.
Together, let’s evaluate the way we approach retirement programs.
Chris Cristallo, CFP®
401k Advisor at BEAM/BGA Wealth
Sources
- Vanguard, How America Saves 2025 (June 2025).
- Internal Revenue Service, “Treasury, IRS issue proposed regulations on new automatic enrollment requirement for 401(k) and 403(b) plans,” Jan. 10, 2025.
- Congressional Research Service, Defined Contribution Retirement Plans: Automatic Enrollment (2024–2025).
- Principal®, The Power of Auto Features (2025).