BOSTON (TheStreet) -- Automatic enrollment in 401(k) plans, touted by President Barack Obama as a way to increase retirement savings, is gaining in popularity, even as the stock-market crash wiped out more than $1 trillion in retirement accounts, two studies show.
Automatic enrollment isn't new, but its use has risen dramatically since the federal Pension Protection Act of 2006 encouraged adoption of automatic 401(k)'s and provided legal clarification on existing state laws.
Automatic enrollment enables companies to provide employees a 401(k) plan with an "opt out" alternative. Traditional plans require employees to "opt in."
Automatic enrollment could boost 401(k) participation rates from a national average of about 75% of eligible employees to as much as 95%, according to the Retirement Security Project, an advocacy group partnered with Georgetown University and the Brookings Institute. Nationwide, about 75 million workers don't have access to an employer-sponsored 401(k), according to the organization, which estimates that automatic-retirement plans could boost U.S. savings by as much as $8 billion a year.The increase in savings would be a boon for asset managers like T. Rowe Price (TROW), Legg Mason (LM), Fidelity and Vanguard. At the end of last year, Americans held about $14 trillion in retirement assets, $3.5 trillion of which was from employer-sponsored direct-contribution plans, which tend to be managed by the largest investment firms. On Monday, the Profit Sharing/401k Council of America released its 52nd annual Survey of Profit Sharing and 401(k) Plans. It found that, following a big increase in 2007, the rate of addition of automatic enrollment had slowed. Nearly 40% of all plans and more than half of large companies offered automatic-enrollment plans last year.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV