"Since joining The 401k Coach Program in 2007, we've had an average annual gowth in our 401(k) business of over 40% and we ended 2010 with quite a few prospective plans in the pipeline." ~ J. Barnes, 401k Coach® Member
When the government decided to allow corporations, who sponsor 401(k) plans, to use automatic enrollment features, it had to ensure the funds that participants were defaulted into were going to be managed in a prudent way.
Default investments do not just apply for first time-enrollments. An increasing number of 401(k) participants actively choose to use default investments throughout their employment. Others roll over 401(k) plans from other companies and likewise, chose to use them.
Ever since the 401(k) was born (by accident) in 1981, it has been widely viewed as America’s Savings Plan. However, this was not really the intention. It was meant to be a way for employees to defer extra savings (bonus money) on a pre-tax basis; as a payroll deduction benefit. It cost little or nothing to the first employers who established these programs.
Now flash forward some 29 years and 4-5 trillion dollars later...