The Auto Reenroll Act of 2025 amends the Internal Revenue Code and ERISA to let qualified automatic contribution arrangements (QACAs) and eligible automatic contribution arrangements (EACAs) periodically reinstate default deferrals for employees who previously elected not to participate. Under the bill, an employee’s decision not to defer may terminate after not more than three years (and not less than one), and the plan may treat that employee as having elected the plan’s default contribution level unless they affirmatively opt out again.
This change applies to the statutory provisions that define QACAs and EACAs and inserts a conforming ERISA amendment; it is effective for plan years beginning after enactment. The provision is designed to raise participation and savings rates, but it also creates operational, notice, and fiduciary questions for employers, recordkeepers, and plan advisers who must implement periodic reenrollment without detailed procedural rules in the bill.
At a Glance
What It Does
The bill adds statutory language to IRC §401(k)(13)(C), IRC §414(w)(3), and ERISA §514(e)(2) permitting plans to end an employee’s prior election not to defer after between one and three years and automatically reenroll the employee at the plan’s default contribution percentage unless the employee affirmatively opts out again. A plan may implement that termination for all covered employees in a single plan year.
Who It Affects
Private-sector employers that maintain 401(k) plans using QACA or EACA designs, plan sponsors and fiduciaries, payroll and recordkeeping vendors, and employees who previously declined automatic enrollment (including those labeled in plan terms as "previously disregarded"). Benefits consultants and ERISA counsel will play a role in redesigning plan documents and operational processes.
Why It Matters
The change institutionalizes a recurring nudge back into retirement savings, which can materially raise plan participation and contributions over time. It also creates new compliance and operational burdens: sponsors must amend plan documents, coordinate payroll/recordkeeping, and evaluate fiduciary risk with limited statutory guidance on notices or timing.
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What This Bill Actually Does
Today many employers use automatic enrollment: employees who don’t make an election are enrolled at a default contribution rate unless they opt out. The Auto Reenroll Act takes that nudge one step further by allowing plans to periodically reverse an employee’s prior choice not to defer and put them back into the default contribution schedule.
Concretely, the bill permits plans to set a termination window — no less than one year and no more than three years — after which a past "opt-out" is treated as ended and the participant is reenrolled at the plan’s default rate unless they opt out again.
The statute amends the tax code definitions of qualified automatic contribution arrangements and eligible automatic contribution arrangements and adds a conforming ERISA change so plan-level automatic reenrollment is recognized for both tax and ERISA compliance. The bill also clarifies that plans can execute the termination for an entire plan year at once, rather than having to follow each participant’s original enrollment date, and includes a specific rule allowing 'previously disregarded employees' (those who were not counted under earlier rules because they had opted out) to be treated as eligible for reenrollment.The bill does not spell out notice content, timing, or sample language; it assumes plans will operate within existing QACA/EACA frameworks (including the plan’s uniform default percentage and matching rules).
That means sponsors must reconcile reenrollment with their current notice regime, operational schedules, payroll cutoff dates, and nondiscrimination or safe-harbor testing. The provision takes effect for plan years beginning after enactment, and the statute expressly avoids creating inferences about prior plan years or allowing reenrollment after more than three years.
The Five Things You Need to Know
The bill permits plans to terminate an employee’s election not to defer after between 1 and 3 years and treat the employee as reenrolled at the plan’s uniform default contribution level unless they opt out again.
It amends IRC §401(k)(13)(C) (QACAs), IRC §414(w)(3) (EACAs), and inserts a conforming change into ERISA §514(e)(2) so reenrollment is recognized across tax and ERISA coverage rules.
Plans may implement the termination at one time for a plan year for all affected employees, removing the need to track reenrollment by each participant’s original enrollment date.
The statute explicitly covers "previously disregarded employees," allowing employees who were previously excluded from counts because they opted out to be treated as eligible for reenrollment.
The amendments apply to plan years beginning after enactment and include a "no inference" clause that they do not alter application to prior plan years or allow reenrollment at intervals longer than three years.
Section-by-Section Breakdown
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Short title
Sets the Act’s name: the "Auto Reenroll Act of 2025." This is purely formal but signals the bill’s focus on periodic reenrollment as an identifiable legislative change to retirement-plan defaults.
Permits periodic automatic deferral under QACAs
Adds a new clause to the statutory QACA definition allowing a plan to have an employee’s election not to defer terminate after no more than three years (and at least one year) and then treat that employee as having elected the plan’s automatic deferral again unless they make a new affirmative election not to defer. The provision also allows plan-level implementation (termination may be made at one time for a plan year for all eligible employees). Practically, this makes recurring automatic reenrollment an acceptable feature for plans that want to reapply their default deferral to prior opt-outs while preserving the underlying QACA safe-harbor structure.
Brings previously disregarded employees into reenrollment scope
Creates a special rule that lets plans treat employees who were previously disregarded under existing QACA counting rules (because they had earlier elected not to participate) as if they had made the requisite election to opt out — thereby making them eligible for the periodic reenrollment. That prevents an administrative hole where individuals excluded from plan counts would otherwise remain exempt from reenrollment mechanics.
Extends the same reenrollment permission to EACAs
Reformats subsections and inserts an explicit subparagraph permitting eligible automatic contribution arrangements to use the same 1–3 year termination and reenrollment model. This aligns tax-favored safe-harbor designs that apply slightly different technical rules with the QACA approach, avoiding a mismatch between plan types on whether reenrollment can be treated as compliant for tax qualification purposes.
Conforming ERISA change, effective date, and limits on retroactivity
Makes a parallel amendment to ERISA §514(e)(2) so reenrollment is recognized under ERISA preemption and fiduciary frameworks, sets the amendments to apply to plan years beginning after enactment, and adds a no-inference clause clarifying that the changes don’t alter treatment of prior plan years or allow reenrollment intervals longer than three years. These items fix coordination across statutory regimes and limit retrospective reach.
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Explore Employment in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Employees who previously opted out of automatic enrollment — they may see contributions restart automatically, increasing lifetime retirement savings without requiring active enrollment actions.
- Plan sponsors and employers seeking higher participation rates — reenrollment provides a repeatable, legally sanctioned mechanism to increase covered payroll and contribution volumes, which can help meet plan objectives and improve workforce financial wellness metrics.
- Younger and low-balance employees — recurring reenrollment targets people who initially declined participation (often younger or budget-constrained workers), so the policy is likely to raise savings among groups that under-save.
- Recordkeepers, payroll processors, and benefits consultants — the change creates demand for new operational services, plan amendments, and communications campaigns, producing revenue opportunities for vendors who can automate reenrollment processes.
Who Bears the Cost
- Plan sponsors and employers — they must amend plan documents, revise notices/procedures, coordinate with vendors, absorb implementation costs, and update payroll timing to support reenrollment windows.
- Recordkeepers and payroll vendors — must develop and operate new logic, reporting, and election-tracking features; those system upgrades will impose development and ongoing processing costs.
- Plan fiduciaries and ERISA counsel — bear increased compliance and litigation risk if reenrollment is not executed exactly as the plan document and statutory framework require, especially given the bill’s lack of explicit notice standards.
- Employees who prefer not to be reenrolled — may face repeated automatic contributions and the administrative burden of opting out repeatedly; transient workers or seasonal employees could be reenrolled inappropriately if plan-level timing is not carefully implemented.
Key Issues
The Core Tension
The central tension is between increasing retirement savings through recurring behavioral nudges and preserving individual choice plus clear, administrable compliance rules: the bill enables stronger nudges that can raise participation, but it leaves sponsors, vendors, and regulators to reconcile operational complexity, notice expectations, and fiduciary risk without the statutory detail that would standardize how reenrollment must be delivered.
The bill grants a substantive permission — automatic reenrollment after a 1–3 year interval — but leaves key operational details to plan sponsors and regulators. It does not impose or describe a specific participant notice regimen, does not mandate timing for notices relative to payroll cycles, and does not alter the statutory requirement that QACAs and EACAs follow their existing default-percentage and matching frameworks.
That gap shifts operational risk onto sponsors: failure to provide adequate notice or to follow plan terms could create ERISA fiduciary exposure or tax qualification disputes. The statute’s allowance that a plan may terminate an opt-out "at one time for a plan year" reduces payroll complexity but raises practical questions about which participants are affected when hires and terminations occur during the plan year.
The bill also raises interactions with nondiscrimination and safe-harbor testing. Reenrolling previously non-participating employees will change contribution distributions used in testing and could affect employer match costs or ADP/ACP outcomes.
Finally, the "previously disregarded employee" rule closes a counting loophole, but it requires that plans maintain accurate historical election records; older plans or those that have changed vendors may face significant record reconstruction. The IRS and DOL will likely need to issue implementation guidance to answer whether additional notice content, sample safe-harbor language, or timing constraints are required for a plan to rely safely on these new provisions.
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