Payroll-processing service Paychex has added an auto-enrollment feature that allows employers to automatically sign up employees to participate in a 401(k) plan.

Once the feature is implemented, employees are enrolled in their company's 401(k) plan 30 days after their eligibility date, but are allowed to opt out before any payroll deductions are made. Employees then have an additional 90 days to opt out of the plan and request distribution of any deductions that occurred without facing penalty fees. All auto-enrolled employees receive a confirmation letter with detailed instructions on how to opt out of the plan.

Since the enactment of the Pension Protection Act of 2006, overall adoption of automatic 401(k) enrollment by large employers has increased by an estimated 19 percent. The Paychex auto enrollment feature is aimed at small and midsized businesses that want to encourage participation in their 401(k) plans.

For more information, visit

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access