Most new 401(k) and 403(b) plans no longer wait for an employee to sign up — SECURE 2.0 made enrollment the default, not the exception, and most employees who’ve never actively opted into a plan may already be contributing without realizing it.
Who This Actually Applies To
Most 401(k) and 403(b) plans established after December 29, 2022 must include automatic enrollment for plan years beginning in 2025 and later — meaning a plan that started in, say, 2023 was required to add auto-enrollment no later than January 1, 2025. Existing plans that predate December 29, 2022 are grandfathered and don’t have to add it. Businesses with 10 or fewer employees, and businesses that have operated for less than three years, are also exempt regardless of when their plan started.
The Default Numbers
Covered plans must default new employees into a contribution rate between 3% and 10% of pay, and that rate must then increase by 1 percentage point each year the employee continues participating, until it reaches at least 10% (capped at 15%) — unless the employee actively opts out or picks a different rate. Employees keep the right to change or stop this at any time; the mandate only sets what happens if they do nothing.
Different From a Plan’s Own Design Choices
This mandatory floor is separate from a plan sponsor’s own design decisions, like choosing a safe harbor match formula over a traditional 401(k) or navigating top-heavy and ADP/ACP compliance testing — those are elective structure choices a plan sponsor makes; auto-enrollment and auto-escalation apply on top of whatever structure is chosen, for any newly established covered plan.
What to Check on Your Own Paystub
Anyone hired into a job with a plan started after December 29, 2022 should confirm their actual current deferral rate rather than assume it matches what they originally elected (or didn’t) — the annual 1% auto-escalation is easy to miss if you’re not checking, and it’s designed to keep raising your rate every year unless you tell the plan otherwise.
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