automatic enrollment - grace period first deferral

Is there a grace period before an employer has to start withholding from an eligible employee's paycheck?  For example, employee is eligible on 1/1/2025.  The employee was given the required notices 30 days prior to 1/1/2025.  If the employee does not make an election to contribute (or not contribute) is the employer required to start withholding from the 1st paycheck after 1/1/2025?  Or can the employer say that they'll start automatically withholding with the first paycheck 30 days after 1/1/2025?   

unless the person was entered into the plan immediately upon hire - no, the 30 days advance notice is the grace period. The default deferrals should typically start on the first pay date on or after 1/1/2025. 

Pay attention to the pay period end date as well. Many plan documents differentiate between pay date (W-2 cash basis) and accrual (when the hours are worked). If there is a pay date on 1/5/2025 and deferrals should apply to it - do it. Even if the hours for that pay date were worked in 2024. 

Here is a link to just about everything you may want to know about automatic enrollment:

https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-automatic-contribution-arrangements-automatic-enrollment-arrangements

See item 7 which starts out saying "You can't deduct automatic enrollment contributions from an employee's wages until the employee has a reasonable time to make an affirmative election (opt out of the plan) after receiving notice. An affirmative election is when the employee decides:

    not to participate in the automatic contribution arrangement or
    contribute an amount different from the plan's default percentage rate."

Breaking this down,

• Give the employee the notice explaining the automatic enrollment contributions.
• Wait a reasonable time for the employee to make an affirmative election.
• Start taking deferrals based on the employee's affirmative election or the plan's default election.

Looking at the QACA rules, it seems the IRS believes a reasonable time is 30 days.  Using a start date of the earlier of the date of receipt of an affirmation election or the end of the reasonable time period, deferrals should start no later than the pay date for the second payroll date after the start date. 

@CDA TPA If employees are given the notice 30 days before 1/1/2025 and the employee does not respond by 1/1/2025, deferrals should start no later than the pay date for the second payroll date after 1/1/2025.  (Arguably this may be earlier in 2025 if the notice is given more than 30 days earlier than 1/1/2025, but this argument is better left for when there is nothing else left to talk about.)