Mandatory Auto Enrollment

I have been told there has been some recent guidance from the IRS (Jan 10 2025?)  in Applying Mandatory AE in that to new participants or new hires is not acceptable under the new guidance.  Is this true?  And if so, what if a plan sponsor has already received an affirmative election by the participant to contribute or decline to contribute? Do they have to go through the process all over again?

The IRS issued a  "Notice of proposed rulemaking and notice of public hearing".  The effective date of the guidance will be as of the first plan year at least 6 months after publication of the final rule.  Given the process for accepting comments, holding hearings and finalizing guidance, the rules likely will not be effective for calendar year plans until 2027.  In the meantime, plans are expected to comply with "a reasonable, good faith interpretation" of the new rules.

That being said, there should be no need to go through the election process all over again.  It sounds as if the plan received affirmative elections from employees.  If an employee did not make an affirmative election, then the AE default elections should have been applied.  This is somewhat of a simplification of what is in the new guidance, but it should suffice as having made a reasonable, good faith interpretation.

Here is a link that will provide more detail about the contents of the guidance, and can help you track the potential issues as the guidance moves through the process of being finalized.

https://ferenczylaw.com/flashpoint-and-not-a-moment-too-soon-in-fact-a-little-late-mandatory-automatic-enrollment-guidance/

There's a lot to absorb, so keep informed as this all unfolds.