September 1, 2023
Many workers think of retirement as a time of transition from the daily grind to more relaxing activities such as spending time with family, pursuing outside interests, and travel. It is viewed as an oasis from the daily pressures and demands associated with a fruitful career. Yet for many Americans this idea of retirement continues to slip away. The unfortunate reality is most will simply not have enough money to stop working, and if they do, such a lifestyle will simply not be possible. This uncomfortable reality is evident in a recent study conducted by the Federal Reserve which found that nearly 25% of working adults have no retirement savings or pension plan. It was also found that only 21% of workers aged 61 and older are retirement ready.
The alarming situation has prompted Congress into action calling for significant changes to make it easier for workers to qualify, participate in, and benefit from employer sponsored retirement plans. Most recently the SECURE Act 2.0 was signed into law which outlines changes to accelerate saving opportunities. Despite it’s sweeping nature, many in Congress are looking for more ways to streamline the process. One example is the Auto Reenroll Act of 2023 which was introduced in late July and allows employers to automatically reenroll non plan participants. To help clients, prospects, and others Wilson Lewis has provided a summary of the key details below.
The legislation which was recently introduced in the Senate would allow employers to adopt an automatic reenrollment feature that would allow them to re-enroll workers who had previously opted out. Exceptions would be allowed for those workers that affirmatively opt out. Plans would also be allowed to sweep as a group everyone who is eligible for reenrollment on a single date, rather than on each worker’s individual enrollment date. Finally, the automatic feature would be limited to eligible employees who are not participating in the plan at all.
In the press release announcing the new legislation, it is noted that some employees chose not to participate in an employer sponsored retirement plan or take advantage of employer matching. Those making entry level wages simply cannot afford to contribute to a plan. However, as workers move up income, many forget to join or increase contributions resulting in a missed opportunity. Giving employers the ability to automatically reenroll eligible participants will ensure valuable savings time is not lost.
A previous version of the legislation, the Auto Reenroll Act of 2022 was introduced last year but did not make it far because of the mandatory requirement for reenrollment. The 2023 version takes a less direct approach making it optional for employers to participate.
While the legislation is still in the early stages of consideration it does provide Atlanta plan sponsors with insight into how Congress will continue to address the retirement savings gap. If you have questions about the information outlined above or need assistance with your next 401k plan audit, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.