The Department of the Treasury and the Internal Revenue Service (IRS) have issued proposed regulations to implement provisions of the SECURE 2.0 Act, specifically addressing automatic enrollment requirements for newly established 401(k) and 403(b) retirement plans. These regulations, if finalized, will require eligible employees to be automatically enrolled in workplace retirement plans starting with the 2025 plan year.
Key Provisions of the Proposal
Under the proposed regulations, employers must automatically enroll employees at a minimum contribution rate of 3% of their pay unless an employee opts out. This rate must increase by 1% annually until it reaches at least 10% of the employee’s pay.
This requirement applies to 401(k) and 403(b) plans established after December 29, 2022, the date the SECURE 2.0 Act was enacted. However, certain exemptions exist for new and small businesses, churches, and governmental plans.
Implementation and Compliance
The proposed regulations aim to guide plan administrators in adequately implementing the automatic enrollment mandate. They are expected to take effect for plan years beginning more than six months after the final regulations are published. Until then, plan administrators must follow a reasonable and good-faith interpretation of the SECURE 2.0 Act.
Public Input and Next Steps
The Treasury and IRS are seeking feedback on the proposed regulations and encourage interested parties to submit comments through the Federal Register. Stakeholders can review the proposed guidelines and share their input to help shape the final implementation of these retirement plan provisions.
For further information, visit the Federal Register website to access the proposed regulations.
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