Written By: John Kemen
If you sponsor a retirement plan for your employees, or you’ve been thinking about starting one, there’s a good chance you’ve heard the phrase “SECURE 2.0” more times than you can count. It’s one of those laws that brought a lot of change to the retirement plan world, and it can feel like there’s always another update, another deadline, or another new requirement to keep up with.
One of the biggest changes business owners should pay attention to is auto-enrollment. And while the rules may not be hitting every employer overnight, this is absolutely one of those topics that is worth dealing with before you get deep into the second half of the year.
As the leader for our Third-Party Administrator (TPA) practice within Burke CPAs and Advisors, we see the same cycle play out every year: employers want to do the right thing, but retirement plan compliance gets pushed down the list until the year-end crunch hits. Midyear is the perfect time to get ahead of it while you still have time to make decisions calmly, coordinate with payroll, and communicate changes to employees without rushing.
What auto-enrollment actually means
Auto-enrollment is exactly what it sounds like. Instead of employees having to take action to enroll in the company retirement plan, the plan automatically enrolls them at a default contribution rate. Employees can still opt out if they want, but participation becomes the default.
In many plans, auto-enrollment is paired with auto-escalation, in which contribution rates gradually increase over time unless the employee decides otherwise. That structure helps employees build better retirement savings without needing to make a bunch of decisions right away.
From an employer’s standpoint, it can be a great feature when it’s set up correctly. It can also create confusion if it’s rolled out quickly or without the right coordination behind the scenes.
How SECURE 2.0 changed the conversation
SECURE 2.0 was designed to increase retirement plan participation nationwide, and auto-enrollment is one of the main ways it does so. For many newly established 401(k) and 403(b) plans, auto-enrollment will become a required feature with certain exceptions depending on employer size, business age, and other factors.
This is where business owners sometimes get tripped up. They hear “mandatory auto-enrollment” and assume it applies to every retirement plan immediately. In reality, a lot depends on when the plan was established, what type of plan it is, and whether an exemption applies.
That’s why we recommend checking your plan status sooner rather than later—because you don’t want to find out late in the year that you’re behind on something you could have handled months earlier with far less disruption.
Why midyear matters more than most think
The reason we encourage employers to talk about this before midyear is simple: even small plan design updates take time.
Auto-enrollment isn’t just a box you check. It raises real decisions that affect both your employees and your budget. For example, what should the default deferral percentage be? How quickly should it increase over time, if at all? When should new hires be enrolled? How does this impact your matching contributions?
Those are business decisions worth careful thought.
And then there’s payroll. Almost every operational issue we see comes back to payroll setup. Even if the plan document is perfect, it doesn’t matter if deductions aren’t happening correctly, opt-outs aren’t being tracked, or contribution files aren’t mapping cleanly to the recordkeeper. When payroll isn’t aligned, the plan can quickly fall out of compliance, and fixing mistakes after the fact is almost always more expensive than preventing them.
The other piece employers sometimes overlook is communication. Auto-enrollment is generally positive, but employees don’t like surprises on their paycheck. A smooth rollout includes a clear explanation of what’s changing, their options, and how they can make adjustments if the default isn’t right for them.
What business owners should do now
If you already have a retirement plan in place, midyear is a great time to pause and ask a few practical questions. Are you confident that your plan’s provisions still align with how payroll is operating? If you recently hired employees, are they being added to the plan correctly and on time? If auto-enrollment becomes part of your plan design now or later, is your payroll provider ready to handle it without manual workarounds?
If you’re considering starting a retirement plan, this is also an important time to ensure the plan you put in place will work long-term, beyond this year.
As a TPA, we’re not just looking at whether your plan “has the right language.” We’re looking at how the plan operates in real life, whether the processes are sustainable, and whether you’re set up to avoid common correction issues.
In closing
Auto-enrollment is becoming a bigger part of retirement plans, and SECURE 2.0 is accelerating that shift. For employers, the best approach is proactive planning. This will save you from scrambling later to meet a requirement, fix payroll issues, or explain unexpected deductions to employees.
If you handle it early, auto-enrollment can potentially improve your plan’s participation and help employees save more consistently, without creating stress for your team.
If you’d like, we can help you review your current plan, confirm whether SECURE 2.0 auto-enrollment rules apply to your situation, and map out a practical implementation plan so you can move into the second half of the year with confidence.