Automatic Enrollment in Defined Contribution Plans

Summary

This practice note discusses automatic enrollment features in defined contribution retirement plans and related issues, as permitted under the Internal Revenue Code and the Employee Retirement Income Security Act (ERISA). Automatic enrollment allows an employer to automatically deduct elective deferral plan contributions at a default rate from an employee's wages unless the employee makes an affirmative election not to contribute or to contribute a different rate. Any plan that allows elective salary deferrals can have this feature. Section 101 of the SECURE 2.0 Act (Pub. L. No. 117-328, Div. T) requires most newly established 401(k) plans and salary reduction 403(b) plans to have an auto-enrollment feature.