If you want to know, as a plan sponsor, how to inform your employees about your retirement plan’s automatic enrollment feature, the Internal Revenue Service (IRS) has posted a sample notice about the subject on its Web site.

The sample notice complies with the most-recent proposed IRS regulations on safe harbor details for qualified automatic contribution arrangements (QACAs) and eligible automatic contribution arrangements (EACAs), as well as the Department of Labor’s regulations on Qualified Default Investment Alternatives (QDIAs).

Automatic enrollment allows an employer to automatically enroll employees once they are eligible to participate in their 401(k) plan. While employees have the ability to opt out of participating, studies have shown that automatic enrollment can increase plan participation by up to 30 percent. This can potentially boost the average contribution percentage for Non-Highly Compensated Employees, which would decrease the possibility of Highly Compensated Employees receiving refunds resulting from Contribution Nondiscrimination Testing.

NADART offers an automatic enrollment feature for its 401(k) plans and provides the required notices to its plan sponsors and participants. To learn more about this plan feature and if it’s appropriate for your company, you can contact a NADART representative at (800) 462-3278, ext. 7161 or at nadart401k@nada.org.