On September 5, 2009, President Obama and Treasury Secretary Tim Geithner announced several new steps designed to make it easier for all Americans to save for retirement. According to the announcement, as many as 78% of Americans – about half of the workforce – do not have a retirement savings plan at work. As a result, in an effort to do more to help families save and give them more choices to reach a secure retirement, the Department of the Treasury has issued guidance and notices that:  

  1. expand opportunities for automatic enrollment in 401(k) plans and other retirement savings plans by creating pre-approved automatic enrollment language for plan documents and issuing guidance to help interested employers automatically enroll employees in SIMPLE-IRA plans so long as the employees are free to opt out;  
  2. create easier ways to save tax refunds by allowing taxpayers to elect to automatically purchase U.S savings bonds with their tax refund simply by checking a box on the tax return;  
  3. describe how employers can allow employees to contribute their unused vacation days to their 401(k) plans; and  
  4. provide a roadmap and model notices for departing employees that clearly explains how to rollover account balances, the key decisions and the tax consequences.

According to the announcement, automatic enrollment in a 401(k) plan increases participation from about 70% to 90% and it is particularly effective in increasing the participation of low income and minority workers, helping them to save for retirement. While nearly half of all larger companies have adopted an automatic enrollment feature, many medium and small businesses have not adopted this feature. By creating pre-approved automatic enrollment language, the Administration is hoping that more employers will quickly add an automatic enrollment feature to their 401(k) plan to help/force employees to save for their own retirement.