Automatic step-up of deferral rates

[AlbanyConsultant]

I've seen a few articles lately that reference the aggressive combo of automatic enrollments (or negative elections) and deferral step-ups. The first part (withholding deferrals from an participant's paycheck unless they say no) has been talked about at length for the past few years, but this is the first time I've heard of the step-up feature.

Somewhere (presumably the SPD, but maybe also the document), the participant's are notified that at the beginning of each plan year, their deferral percentage will automatically be raised (the articles I saw didn't make it clear if the participant could opt out of the increase, though I presume a participant could change their withholding percentage at the next appropriate time) by 1/2% or 1% or whatever.

There were very few details, so I was wondering if this is something that is just gaining momentum, or maybe I haven't found the articles against it yet. Has anybody heard about this, or actually implemented it? Obviously, this would be a great help to the non-safe harbor 401(k) plans, but I'm not wild about being the first on the block to recommend it! Thanks for your input.

[E as in ERISA]

See the second page of the "Mark Iwry letter" that indicates increases can occur, provided sufficient notice is given:

http://www.americanbenefitscouncil.org/doc...cenrollment.pdf