Employers offering 401(k) plans and other defined contribution plans would be required to provide an automatic-enrollment feature under a proposal in President Barack Obama’s 2010 budget blueprint.
The proposed requirement was included as part of a larger proposal that would require employers that aren’t already offering another retirement program to enroll employees automatically in a direct-deposit IRA account, Thomas E. Gavin, a spokesman for the White House Office of Management and Budget, wrote in an e-mail response to questions.
“The goal is to increase savings,” Mr. Gavin wrote. “As the budget noted, 75 million working Americans — roughly half the work force — currently lack access to employer-based retirement plans. In addition, the existing incentives to save for retirement are weak or non-existent for the majority of middle-and low-income households.”
Employers currently are not required to offer automatic enrollment.
“Employers will be concerned that this is the first mandate in what has been a voluntary system,” said Jan Jacobson, senior counsel, retirement policy, American Benefits Council.
“The flexibility in plan design of the DC plan system has been a big factor in its success, and we would hate to lose that,” added Ed Ferrigno, vice president of Washington affairs for the Profit Sharing/401(k) Council of America.
