Read more:About to Retire?
SECURE 2.0 didn’t introduce the idea of automatic enrollment.
Will my retirement contribution amount automatically increase?
And the year after that, it would bump up to 5%, and so on.
That doesn’t mean you have to contribute the percentage that’s set up for you, though.
Is my employer required to follow these retirement plan changes?
The mandatory components of SECURE 2.0 only apply to retirement plans established after December 29, 2022.
If your employer established a plan before that date, they won’t be required to automatically enroll employees.
Ultimately, it will be up to each employer to make those determinations.
Let’s say the employer sets the withholding amount at 3%.
With automatic escalation, your contribution amount will increase every year, typically by 1% per year.
Why are these 401(k) changes happening?
The idea behind automatic enrollment and escalation is to make saving for retirement easier for employees.
Can I opt out of these changes?
If you’re automatically enrolled in a 401(k), you’re free to opt out.
You’ll be notified if your employer enrolls you, and you might choose to cancel your enrollment.
You just can’t exceed the retirement plan contribution limits set by the IRS.
