SECURE 2.0 has been in the headlines as plan advisors, administrators, and sponsors are hard at work to ensure compliance with new legislative requirements. Several key provisions are set to become mandatory on January 1st. In this blog, we’ll tell you everything you need to know about mandatory auto-enrollment for new plans.

Auto-enrollment has long been encouraged, but beginning in 2025 it will become a requirement. New plans (defined as any 401(k) or 403(b) plan started after December 29, 2022) must auto-enroll employees at a 3% deferral rate (at least) to a 10% deferral rate (at most). This rule applies to companies that have been in business for more than 3 years and have at least 10 employees. Church and government plans are exempt. This auto-enrollment must automatically increase yearly by 1% until reaching at least 10% (but not exceeding 15%).

If you’re an advisor, click here for more on how this provision will impact your clients and quick tips on being a strategic partner and providing top-notch participant service.