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Permits 401(k) plans to periodically reenroll workers whose prior opt-out ends after 1–3 years by treating them as defaulted into the uniform deferral percentage unless they opt out.
Official title: Amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to allow for periodic automatic reenrollment under qualified automatic contribution arrangements, and for other purposes.
Introduced May 21, 2025 by Timothy Michael Kaine · Last progress May 21, 2025
The bill increases retirement savings and broadens plan coverage through automatic reenrollment and clarified safe harbors, but it can reduce some employees' take-home pay, create administration costs for employers, and raise confusion or disputes about consent and fiduciary duties.
Middle-income workers will be automatically reenrolled into retirement contributions after 1–3 years unless they opt out, increasing their retirement savings rates.
Previously excluded employees can be treated as 'previously disregarded employees' and brought into default contribution rules, broadening retirement plan coverage and access.
Employers and plan administrators get clearer safe-harbor rules preserving automatic arrangement status when opt-out elections lapse, reducing fiduciary uncertainty and compliance risk.
Some employees may have retirement contributions resumed after termination or lapse without affirmative consent, lowering their take-home pay and potentially harming those who intended to remain out of the plan.
Automatic reenrollment and new categories could create confusion or disputes about consent and fiduciary duties if notices or opt-out processes are unclear, risking litigation or lost trust.
Employers may incur administrative and compliance costs to implement periodic reenrollment mechanics and track termination windows and newly defined employee categories.
Based on analysis of 2 sections of legislative text.
Allows 401(k) plans that use automatic enrollment/automatic escalation to automatically reenroll workers who previously opted out after a fixed period. If a participant’s opt-out election ends after 1–3 years, the plan can treat the participant as reenrolled at the plan’s default deferral percentage unless the participant affirmatively opts out again. The change updates parallel Internal Revenue Code and ERISA rules and applies to plan years beginning after enactment.