Road Testing SECURE 2.0's Auto-Enrollment Mandate for New DC Plans

Summary

Some defined contribution (DC) plans will have to gear up for mandatory automatic enrollment under the SECURE 2.0 Act of 2022 (Div. T of Pub. L. No. 117-328). Unless an exception applies, 401(k) and 403(b) plans established after Dec. 28, 2022, must offer an "eligible automatic contribution arrangement" with automatic escalation and permissible withdrawal features starting with the 2025 plan year. This mandate also applies to employers adopting a multiple employer plan (MEP) after that date, even if the MEP was already established. Auto-enrolled employees' contributions must be invested in a qualified default investment alternative (QDIA). This article examines SECURE 2.0's auto-enrollment mandate and its numerous exceptions and provides a road map of implementation questions ripe for agency guidance.