Pentegra Promotes ‘Automatic’ 401(k) Plan Design Features

Pentegra Retirement Services introduced the “Pentegra SmartPath,” a new brochure that details recommended progressive 401(k) plan design best practices.

Pentegra says automatic plan features help sponsors better meet the needs of plan participants and drive more successful outcomes overall. The “Pentegra SmartPath” offers plan sponsors a guide to implementing these 401(k) plan design features, which can include automatic enrollment, automatic escalation of salary deferrals, automatic portfolio rebalancing and utilization of qualified default investment vehicles.

Pentegra says such features help plan participants set a reasonable level of salary savings, increase their contributions over time, achieve proper investment diversification, and make better use of a plan’s investment alternatives. Placing participants in an appropriate investment option at a preselected contribution rate that increases annually essentially replaces some of the most important features of a defined benefit (DB) plan, such as automatic coverage and professional investment management.

Pentegra explains in SmartPath that, in order to achieve best-in-class results in terms of participant retirement readiness, plan sponsors must add more automatic plan features, which can help plan participants achieve the 10% savings rate Pentegra believes is crucial to success.

According to Rich Rausser, senior vice president at Pentegra, “With the 401(k) plan becoming the sole retirement plan for many employees, it is more important now than ever before to ensure that it is designed to help participants meet their goals. Plan success should be measured in terms of how well your plan is able to help participants meet their retirement goals for financial security. Real plan effectiveness should be measured in terms of whether participants are on track to succeed. Staying on track is the key, which was the impetus to create our new Pentegra SmartPath.”

Rausser says the retirement plan industry has learned that education alone does not drive participant behavior. 

“Ensuring successful participant outcomes begins with progressive plan design that maximizes positive participant behaviors,” he adds. “Progressive redesign of the 401(k) plan can only help participants achieve higher levels of retirement readiness and success.”

Pentegra plans to promote the SmartPath with its clients and adviser partners over the coming months. For more information and to view the SmartPath brochure, go to