September 29th, 2006 US Department of Labor Proposes Safe Harbor Rule to Encourage 401k Retirement Saving

401k Participants have seen growth rates of 50% over the past 7 years. Long Term Contributors saw their savings grow from $67,785 in 1999 to $102,014 in the year 2005.
Fact: Employee Benefit Research Institute and the Investment Company Institute (EBRI).

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September 29th, 2006 US Department of Labor Proposes Safe Harbor Rule to Encourage 401k Retirement Saving
News Release from Washington (Dow Jones)

The US Department of Labor unveiled a Safe Harbor Plan for corporations that automatically enroll their employees and workforce in 401k retirement plans. US Department of Labor Secretary, Elaine Chao, quotes "Too many workers, some overwhelmed by investment choices or paperwork, are leaving retirement money on the table by not signing up for their employers' defined contribution plan. This regulation would boost retirement savings by establishing default investments for these workers that are appropriate for long-term savings"

This plan is only available to companies that meet expected standards set by the DOL. This new rule will implement provisions from the Pension Protection Act of 2006 (an act that provides financial safety to companies that offer automatic 401k enrollment for their employees).

Many firms do NOT want to automatically enroll their employees in 401k retirement savings programs because incase the value of these 401k accounts go DOWN, the employees will blame their employers. This perceived liability is stopping many firms from automatically enrolling their employees into 401k plans.

This Pension Act is meant to provide a safety harbor for companies that do automatically enroll their workforces into 401k retirement plans. The exact details and specifications of this act have not been released yet.