Putting Your Plan on Autopilot
Some employers have taken over the wheel by offering an automatic 401(k) feature and have helped their employees put their retirement plan on “autopilot”.   Employers automatically enroll new employees in their 401(k) plan as soon as they become eligible while giving them the opportunity to opt out.  Employers can also make default choices regarding the amount employees contribute to the 401(k) and where the funds will be invested.  Employees retain the right to "opt out" or make alternative choices regarding the amount withheld from their paychecks and the funds in which they are invested.

The “Autopilot” Recruits New Participants
Automatic enrollment boosts participation among lower-income employees, who are the least likely to participate in the 401(k) plans.  Automatic enrollment will also benefit your ADP/ACP test percentages by increasing the overall percentage of the Nonhighly Compensated Employees contributions, thus allowing the Highly Compensated Employees the option of contributing more of their compensation with decreased risk of receiving excess contributions at year end. This is exceptionally beneficial to a plan if a majority of the eligible nonhighly compensated employees are not electively contributing to the plan and the plan does not currently have safe harbor contributions to eliminate the need to perform the nondiscrimination ADP/ACP testing.

You are in the best position to maximize the value for your employees retirement security through the retirement plan that you offer.  The first step could be as easy as setting up automatic 401(k) enrollment features.  It may be worthwhile to take the initiative now to help achieve a more secure retirement for your employees in the future.  Your efforts can potentially reward you with a happier, more productive, and loyal workforce that is also on the road to a secure retirement.

Required Minimum Distributions, often referred to as RMDs, are the amounts that the federal government requires you to withdraw annually from traditional IRAs and employer-sponsored retirement plans after you reach age 70½ and have terminated from the plan. Participants who are owners of the company must begin receiving RMDs after becoming 70½ regardless of employment status. The first RMD can be delayed until April 1st of the following year, but a second RMD will be required by the end of that calendar year.

Please Note: The RMD rules apply to all IRAs and employer sponsored retirement plans in which you maintain a balance.

The RMD rules are calculated to spread out the distribution of your account balance over your life expectancy or the joint life expectancy of you and your beneficiary. The purpose of the RMD rules is to ensure that people don't just accumulate retirement accounts, defer taxation, and leave these retirement funds as an inheritance. Instead, RMD's generally have the effect of producing taxable income during your lifetime.

For a quick overview of the eligibility requirements of your plan, the best source for plain language is your Summary Plan Description (SPD).

The SPD lists specific descriptions for Eligible Employees, Eligibility Requirements and Entry Dates (for both new participants and rehired participants). The following are general definitions for participation:

Eligible Employees
Most plans allow any employee to enter the plan. Each plan may have statutory and non-statutory exclusions for particular classes of employees.

Eligibility Requirements
Your plan document states the required age and/or years of service. Eligibility requirements can differ between contribution sources. Rehired employees may be able to enter the plan immediately, if they have met the requirements prior to termination.

Entry Dates
After meeting the plan's eligibility requirements, the participant may now enter the plan on the next entry date. Every plan document states the entry date for each contribution source. Examples are: the first day of the month, quarter, or half year following satisfaction of the requirements.