Key Takeaways
- The SECURE Act 2.0 required that “new” 401(k) and private sector 403(b) plans automatically enroll their eligible employees, but not until plan years beginning after December 31, 2024…just weeks from now.
- “New” plans include most that were established on or after the enactment date of SECURE 2.0—December 29, 2022.
- Unfortunately, it is likely that some of the affected plan sponsors will fail to automatically enroll their eligible employees on a timely basis.
- My last post discussed the correction methods if the failures occurred due to a “reasonable administrative error” and were corrected on a timely basis.
- This article discusses corrections for those failures if they did not result from a “reasonable administrative error” or if they were not corrected on a timely basis.
SECURE 2.0 was enacted on December 29, 2022. Among its provisions is a requirement that “new” 401(k) plans and private sector 403(b) plans must automatically enroll their eligible employees, but not until the first plan year beginning after December 31, 2024 (the “applicable date”). Since most participant-funded and participant-directed plans, such as 401(k)s and 403(b)s, operate on a calendar year, this article discusses the effective date as if it were for the 2025 calendar year—just weeks from now.
Two earlier blog posts, Things I Worry About (1) and Things I Worry About (2), discussed the general requirements and my concerns about which employees must be automatically enrolled. My last post, Things I Worry About (3), covered the straightforward and low cost corrections in SECURE 2.0 where the failures were due to reasonable administrative errors and were corrected on a timely basis.
This one looks at correcting automatic enrollment failures, such as not enrolling the eligible employees when required, that are not due to reasonable administrative errors or are not corrected on a timely basis.
Continue reading Things I Worry About (4): Automatic Enrollment (4)
