In the 401k industry, “enrollment” refers to the process by which an employee elects to participate in their employer’s 401k plan. This generally involves choosing how much of their pre-tax salary to contribute to the plan (up to a certain limit), and possibly selecting from among the various investment options available within the plan.
Automatic enrollment is a common feature of many 401k plans. With automatic enrollment, an employee is automatically enrolled in the 401k plan upon meeting certain conditions, like completing a probationary period. The employee is then given a pre-set contribution rate and a default investment choice, which they can change if they wish.
It’s also worth noting that there is usually an “open enrollment” period, often once or twice a year, during which employees can make changes to their 401k plan elections. Changes could include adjusting contribution rates or changing investment choices.
The process can differ between companies and depending on the specifics of the 401k plan, but this is a general definition.