WASHINGTON, D.C. — The Department of the Treasury and the Internal Revenue Service (IRS) have introduced proposed regulations mandating automatic enrollment provisions for newly established 401(k) and 403(b) retirement plans under the SECURE 2.0 Act. Set to take effect in the 2025 plan year, the new rules aim to boost participation and savings among employees.
Under the proposal, eligible employees must automatically be enrolled in their employer-sponsored plan at a minimum contribution rate of 3% of their pay unless they opt out. Contribution rates must increase annually by 1% until they reach at least 10%. These requirements apply to 401(k) and 403(b) plans created after December 29, 2022, when the SECURE 2.0 Act was enacted.
However, specific exemptions apply. Businesses that are new or have fewer than 10 employees, as well as church and governmental plans, are excluded from the automatic enrollment mandate.
The proposed regulations provide detailed guidance to help plan administrators implement the rule but will not be enforced until at least six months after the issuance of final regulations. Until then, plan administrators are expected to use a reasonable, good-faith interpretation of the law.
The Treasury and IRS are encouraging public feedback on the proposed regulations, with comments to be submitted via the Federal Register following publication scheduled for January 14, 2025. These rules reflect efforts to simplify retirement savings and encourage broader participation in workplace plans.
For the latest news on everything happening in Chester County and the surrounding area, be sure to follow MyChesCo on Google News and MSN.