Automatic enrollment is a feature that helps you start saving for retirement without having to take any action. If your employer’s plan includes this feature, you’ll be automatically enrolled at a default contribution rate. You can always change your contribution, update your investments, or opt out entirely.

Who This Applies To

This information applies to employees/participants whose employer has selected automatic enrollment (with or without auto-escalation) as part of their 401(k) plan.

How Automatic Enrollment Works

When you become eligible for your company’s 401(k) plan:

  • Default Contribution Rate: A percentage of your paycheck is automatically contributed to your 401(k).
  • Default Investment: Contributions are invested in a default fund (often a target-date fund) unless you choose other investments.
  • Opt-Out Option: You can opt out if you don’t want to participate or want to participate at a different contribution rate. 
  • Employer Match: If your employer offers a matching contribution, automatic enrollment helps ensure you don’t miss out on this benefit.

What Is Auto-Escalation?

Auto-escalation automatically increases your contribution rate each year if you don’t make changes. The typical schedule looks like this:

  • Year 1–2: 3%
  • Year 3: 4%
  • Year 4: 5%
  • Year 5: 6%
  • Year 6: 7%
  • Year 7: 8%
  • Year 8: 9%
  • Year 9: 10% (up to 15% in Simply Retirement plans)

Why it matters: Financial experts generally recommend saving 6–15% of your pay over your career to be on track for retirement. Auto-escalation helps you gradually reach this level without having to take action each year.

Automatic Enrollment Default Contribution Rates

Your default contribution depends on the type of plan your employer adopted:

  • Plans with Auto-Escalation
    • Start out at a minimum of 3% of your pay (per ERISA). (Your employer may elect to start at a higher percentage rate).
    • Contributions increase automatically each year. The escalation is capped at 10-15% (per your employer's election) unless you opt out.
  • Plans without Auto-Escalation
    • Your employer may set a flat rate between 6% and 15%, depending on plan design and start date.

Can I Change My Contribution or Opt Out?

Yes, you are always in control of your savings. You can:

  • Opt Out of participation (usually within a designated time frame).
  • Change Your Contribution Rate at any time—raise it to save more or lower it if needed.
  • Select Different Investments instead of the plan’s default fund.

To opt-out of automatic enrollment or change the amount/percentage you contribute per pay period:

  1. Log in to your account
  2. Click 401(k) in the left side navigation menu
  3. Click Manage Deferrals
  4. In the Automatic Enrollment screen check "Opt-out of Auto Enrollment at X% to choose a different savings amount or to make Roth contributions"
  5. Update your elections if needed, and click Save
  6. You may be prompted again if you have opted-out and did not elect to defer. Click I wish to participate to go back and add an election or click Save to opt-out completely.

What You Should Do Next

If you’ve been automatically enrolled, consider:

  1. Reviewing your contribution rate to decide if the default is right for you.
  2. Checking for an employer match—and aiming to contribute at least enough to get the full match (free money toward your retirement).
  3. Reviewing your investment choices to confirm they align with your retirement goals.

Need Help?

If you have questions, email us at info@myubiquity.com or chat with us 24/7 by clicking the chat icon after logging into your account.