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 Obamas 2010 budget blueprint.
The proposed requirement was included as part of a larger proposal that would require employers that arent 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.