Ready to Enroll? SECURE 2.0’s Auto-Enrollment Rules for New Plans

Starting in 2025, mandatory automatic enrollment is the rule for new 401(k) and 403(b) plans, as provided under the SECURE 2.0 Act of 2022 (Div. T of Pub. L. No. 117-328). The rule applies to plans established after December 28, 2022, which will need to offer an "eligible automatic contribution arrangement" with automatic escalation and permissible withdrawal features. A push for the reluctant saver.

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Related Content

• SECURE 2.0 Act Impact on Retirement Plan Compliance and Administration
  Learn more about SECURE 2.0’s new rules across the retirement plan spectrum.  Several new rules provide a route for the government to accelerate revenue. For example, starting in 2023, plans can permit participants to designate all or part of their fully vested employer matching and nonelective contributions as Roth contributions. Taxation now and earnings become tax-free. Win-win!

• 401(k) Plans: Understanding the Rules
  See how, starting in 2024, catch-up contributions for participants with prior year compensation of $145,000 or more (adjusted for inflation) will only be made on a Roth basis. Targeted increased limits will apply. So, starting in 2025, participants ages 60-63 can make additional catch-up contributions, above the catch-up contributions already available to participants, age 50 or older.

Legal Developments  

• States Update Group Health Plan Sponsor Reporting Obligations
  While arguably preempted by ERISA, state health plan reporting does exist for group health plan sponsors, but no state has added a new reporting obligation since 2021. 
• SECURE 2.0 Upends IRS Correction Procedures
  SECURE 2.0 brings significant changes to the correction of inadvertent errors for employer retirement plans using EPCRS.
• SEC Issues Guidance on Pay Versus Performance
  SEC adopted new rules last year requiring registrants to clearly disclose the relationship between executive compensation actually paid and their financial performance (so-called "pay versus performance" or "pay-for-performance").

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