NAPA Net - Polling Places 012723

Will an Automatic Mandate Help or Hinder Plan Adoption?

There are a lot of optional plan design enhancements to be found in the new SECURE 2.0 Act of 2022 – but there’s one mandatory feature that could have effects both positive – and negative. We’d like to know what you think.

Beginning in 2025, all new 401(k) and 403(b) plans (which is to say all adopted after 12/29/22) except:

businesses with fewer than 10 employees,
new businesses less than 3 years old, and
churches and governments

Must automatically enroll participants at 3%-10% and increase the rate by one percent per year to at least 10%, but no more than 15%. Of course, employees would have at least 90 days to opt out and take a distribution of any automatic deferrals.

This also applies to adoption of a MEP after enactment date (based on employers adoption, not elective date of MEP).

While this is arguably a good thing for participants, and is consistent with the growing trend of employers to not only adopt automatic enrollment but contribution acceleration – but might the REQUIREMENT to do so (even though it doesn’t have to be implemented until 2025) slow new plan adoption? Or might that (potential) hesitation be overcome by other provisions in SECURE 2.0 (notably the generous tax credits for new plans)?

Question Title

* 1. Generally speaking, what impact do you think the new automatic enrollment requirement will have?

Don't expect it to have any real impact.

It might produce hesitation, but the SECURE 2.0 tax credits will overcome that.

It doesn't take effect until 2025, so no impact.

Oh, it has already caused a pause.

I think plans will adopt automatic enrollment BEFORE 2025.

No earthly idea.

Comments on that?

Question Title

* 2. Generally speaking, do YOU think this was...

A great idea.

A great idea, overdue.

Problematic, considering the timing.

A no-brainer alongside the start-up tax credits in SECURE 2.0!

Unnecessary.

Unnecessary, and potentially problematic for new plan adoption.

Something small plan sponsors probably won't want to deal with.

Comments on that?

Question Title

* 3. Any other comments on small plan provisions in SECURE 2.0, the decision to make auto-enrollment/escalation mandatory, the impact of the decision to make auto-enrollment/escalation mandatory on plan adoption, the impact of the decision to make auto-enrollment/escalation mandatory on retirement security, the power of the SECURE 2.0 tax credits, the ability of the SECURE 2.0 tax credits to overcome potential hesitation resulting from the decision to make auto-enrollment/escalation mandatory, or life in general?

Question Title

* 4. Suggestions for future survey questions?

Question Title

* 5. All responses are anonymous and confidential, of course - but if you'd like me to know who you are, or allow for a response, you can leave your email below...