SECURE 2.0 auto enrollment EACA requirement starting 2025

Section 101 modifies IRC 414 with the new 414A requirement. Specifically regarding paragraph(b)(3)(A)(ii), does the language require that the participant must make a new election each year, or if they make an election other than the auto enrollment percentage in 2025, does that election carry forward, if the plan so provides, until such time as the participants makes a new election? I believe it is the latter, but I'm not 100% certain.

My understanding is the plan is not required to get an new election each year from each participant.  The plan is required to give each participant a notice each year before the start of the next plan year which explains the EACA including default elections, auto-increases, and opt-out elections among other things.  The timing of the annual notice is the 30 - 90 day window before the start of the new plan year.

That being said, the plan document can have provisions that require the plan administrator to solicit new elections for each participant every year.  The plan may also provide that a participant that is not deferring anything will have default elections made unless the participant again opts out.  The plan may extend this default to a participant that is deferring, but is deferring below the minimum default deferral percentage.

Then there is administration of refunding deferrals if the participant requests to opt out and the plan permits it.

These are yet more decision points for the plan sponsor, and hopefully the decisions be made with due consideration of the company's payroll being able to adhere to the requirements of the plan.

And let’s consider: Many plans’ sponsors and administrators will interpret what the tax-law condition requires or permits and how to administer a set of partially or ambiguously written plan provisions about two or more years before those provisions might be stated by what tax law calls “the” plan document.

There was a bill proposed last year that would have required automatic re-enrollment of participants who opted out or who enrolled at a lower percentage than the auto-enrollment default. If a new law would be needed to require auto re-enrollment, then it stands to reason that auto re-enrollment is not required under current law.

Ambiguously written? Nah, couldn't be...

Thanks all for the opinions. It's very reassuring to be able to see the informed discussion on such issues.