Retirement Plan Reenrollment Option

Summary#

The Auto Reenroll Act of 2025 would amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 (ERISA). Its stated goal is to allow certain workplace retirement plans to periodically reenroll people who had chosen not to contribute; it does not require plans to do this.

  • A qualifying plan could end a participant’s choice not to contribute after 1 to 3 years and treat them as having chosen the plan’s default contribution rate, unless they make a new choice not to contribute.
  • A plan could end those choices at the same time for everyone in a plan year, even if participants enrolled on different dates.
  • The change would apply to qualified automatic contribution arrangements, eligible automatic contribution arrangements, and certain ERISA automatic contribution arrangements.
  • For qualified automatic contribution arrangements, the bill also changes a rule for employees already working when the arrangement starts and allows certain employees previously left out because they opted out to be treated as having made an election for reenrollment purposes.
  • The amendments would apply to plan years beginning after the bill becomes law. The bill is not yet law.

What it means for you#

  • Workers and plan participants: If your plan adopts this option, your earlier choice not to contribute could end after 1 to 3 years. Contributions would then be made at the plan’s default percentage unless you make a new choice not to contribute.
  • Employers and retirement plan operators: They could choose to adopt periodic reenrollment. The bill does not require them to, or set out an application, notice, or decision process.
  • Taxpayers and the public: The bill changes rules for workplace retirement arrangements. It does not create a new public benefit, require anyone to join a plan, or set a tax rate.
  • Current law: The supplied material does not include the full existing provisions of the amended laws, so the exact current rules and how the changes interact with them could not be verified.

Money#

No cost information is in the available material.

  • The bill gives eligible plans permission to use periodic reenrollment, but does not require them to do so.
  • It provides no estimate of government costs, plan administration costs, or effects on tax revenue.
  • If a plan uses the option, a participant’s pay would be reduced by contributions at the plan’s default percentage unless the participant makes a new choice. The bill does not set that percentage.

What is unclear#

  • How plans would notify participants before their opt-out choice ends; the bill does not set a notice rule.
  • What steps participants would use to make a new choice, or how quickly a plan must act on it.
  • Which employees count as “previously disregarded” under the amended tax-code rule in practice; the bill’s definition refers to existing provisions not supplied here.
  • Whether plans would adopt reenrollment, and how many participants would be affected.
  • The bill does not explain how this option would interact with other plan rules or set oversight and reporting requirements.

Case for#

  • The bill appears intended to let plans give people another opportunity to save after an earlier choice not to contribute.
  • A possible argument for the bill is that people’s circumstances or choices may change over time, while a plan’s default contribution arrangement can make restarting contributions simpler.
  • Letting plans choose whether to use reenrollment, and allowing participants to make a new choice not to contribute, preserves plan and participant choice.

Case against#

  • One concern is that a participant’s pay could be reduced again without a new affirmative choice to contribute, if they do not notice or respond when their opt-out ends.
  • The bill does not require advance notice or describe a process for making a new choice, so participants’ ability to avoid deductions may depend on rules outside the bill.
  • Plans that adopt reenrollment may face administrative work, but the bill gives no cost estimate or details about that work.
  • The bill does not require plans to adopt the option, so whether workers encounter it would vary by plan.