All Guideline plans include a form of an automatic enrollment provision, which cannot be removed from our plans. Starting on January 1, 2025 under the Secure 2.0 Act, auto-enrollment will become mandatory for certain retirement plans.
While automatic enrollment means eligible employees will automatically be enrolled in a Guideline 401(k), they are not required to contribute to the plan. Rather, it means that employees must make an active decision not to contribute to the plan. The major benefit of auto-enrollment is that it eliminates indecisiveness and procrastination, providing employees with a seamless path to retirement savings.
Employees can opt out of contributing or change their contribution percentage at any time once they’re enrolled in the plan.
How auto-enrollment works for new plans
For new plans, employees who haven’t made their own contribution election will automatically be enrolled in the plan at the default deferral rate 30 days after they receive their automatic enrollment notice. This will apply to all participants except for company owners who do not receive W-2 wages unless the plan includes a qualified automatic contribution arrangement (QACA).
How auto-enrollment works for active plans
For active plans, employees who become eligible will automatically become enrolled at the plan’s default deferral rate if they either take no action or do not elect their own contribution amount. Auto-enrollment will occur by the later of either two pay periods or two weeks after the eligibility requirements are met, though actual timing may vary depending on the company’s payroll provider.
Administrators can review the eligibility and enrollment status of employees in the Roster tab of the administrator dashboard.
How employees can opt out from contributing
Self opt out: Employees who do not wish to contribute to the plan can opt out by accessing their Guideline accounts and changing their contribution rate to 0%. Employees can find step-by-step directions for opting out here.
Administrator opt out: Employees who do not wish to contribute to the plan and are unable or unwilling to log into the system can provide the 401(k) administrator with written notice of their desire to not contribute. Admins can then manually opt out employees from their Guideline administrator dashboards by navigating to the Roster tab and clicking on the employee’s name from the list. Then, select the "Opt-out from auto-enrollment" checkbox, and click the "Update Employee" button to save. While an employee can choose not to contribute to the plan, they are still considered participants for most plan purposes and should still set up their Guideline account so they can more easily find information about the plan.
If an administrator manually opts out an employee, the written election must be kept on file as proof of the election not to participate. This will be needed in the event the plan is audited.
Please note that once an employee has been automatically enrolled, this cannot be changed in the Guideline administrator dashboard. Instead, the employee must log in to their participant dashboard and opt themselves out. Employees who would like to opt out via their participant dashboards can find step-by-step directions here.