Resources

Automatic Enrollment Communication

What is Required?

Covered plans must implement the automatic enrollment arrangement by the beginning of their 2025 plan year. The arrangement must meet the following requirements:

• Employees are automatically enrolled to contribute between 3% and 10% of their pay.

• The participant contributions will then increase by 1% each year to at least 10% and not more than 15%.

• Employees must have the option to opt out of the plan completely or change their contribution rate.

• The plan must offer employees who are automatically enrolled a period of 90 days to stop contributions and take the automatic contributions out of the plan.

What Options Do I Have?

◦Let us know if you are currently exempt from the mandate.

◦Add an Eligible Automatic Contribution Arrangement to your plan and keep everything else about your current plan design the same.

◦Modify your existing plan design to be a Qualified Automatic Contribution Arrangement safe harbor plan.

Eligible Automatic Contribution Arrangement
(EACA) Only

• Employees may withdraw deferrals in 90 day period

• 3-10% minimum starting auto-deferral, escalation of 1% per year to 10-15%

• Option to opt out

• Notice given when initially eligible and annually thereafter

• Employer contribution is permitted; no required design; may be combined with non-QACA safe harbor

• If combined with non-QACA safe harbor design; safe harbor contributions must be 100% vested

Qualified Automatic Contribution Arrangement
(QACA) Safe Harbor

• Employees may withdraw deferrals in 90 day period

• 3-10% minimum starting auto-deferral, escalation of 1% per year to 10-15%

• Option to opt out

• Notice given when initially eligible and annually thereafter

• Employer contribution may be either 3% nonelective contribution or a match of at least 100% of first 1% deferred plus 50% of next 5% deferred (3.5% match total)

• May impose 2-year vesting schedule on these safe harbor contributions

Attached is the Automatic Enrollment Form.