New 401(k) Plans Now Auto-Enroll You and Raise Your Rate Every Year: How to Check Yours

Most people can tell you roughly what they earn. Far fewer can tell you what percentage of it leaves their paycheck for retirement before they ever see it. If your employer's 401(k) is new, that number may have been chosen for you, and it may be quietly going up every year.

This is the result of a rule in the SECURE 2.0 Act. Starting with plan years beginning after December 31, 2024, most 401(k) and 403(b) plans established after December 29, 2022 must automatically enroll eligible employees. The rule has been rolling into practice through 2025 and 2026, so a lot of people are only now meeting it for the first time. What follows is general information, not advice for your situation, and your plan document is the final word.

What the rule says

Two numbers define it. The starting deferral must be at least 3% of pay and no more than 10%. After that, the plan has to raise it by one percentage point each year until it reaches at least 10%, and it may not push the automatic rate above 15%.

So a plan that starts you at 3% takes about seven annual steps to reach 10%. Nothing about this needs your signature. You are enrolled unless you say otherwise, which is the point: people tend to stay where the default puts them.

How to tell whether you were auto-enrolled, and at what rate

The enrollment may have arrived as a short notice during onboarding, or as a line in a long benefits packet. Three places usually settle it: your paystub, the plan's online portal, and the summary plan description that the administrator is required to give you.

On the paystub, look for a line labeled 401(k), 403(b), or something like "retirement deferral." It will show a dollar amount for this period and a year-to-date total. Divide the period amount by your gross pay for the same period. The result is your actual deferral rate, which is the number worth knowing.

The real cost of not opting up

The default is a floor, not a recommendation. A 3% start, even with the annual steps, can leave you well short of what people commonly aim for, and a plan whose automatic ceiling is 10% will stop there whether or not 10% is enough for you.

Here is a deliberately simple illustration. Suppose your pay is $60,000 and stays flat. The difference between saving 10% and 15% is $3,000 a year. Put that into an account earning a steady 6% for 30 years and it grows to roughly $237,000, before inflation. Those are assumptions, not predictions: real returns are uneven, and pay changes. But the shape holds. A five-point gap, left alone for decades, is large.

The other cost is the employer match. If your plan matches contributions up to a certain percentage, a default rate below that threshold means you are leaving part of the match unclaimed. Check the match formula before anything else, because it is the closest thing to free money in the plan.

How to override the default in either direction

You can raise your rate, lower it, or opt out entirely, usually through the plan's portal or a short form from HR. Raising is the more common direction, and I think it is worth being deliberate about the escalator: some plans let you choose your own annual step, or set it higher than 1%.

Lowering or leaving is legitimate too. If you carry high-interest debt or have no emergency cushion, a smaller deferral for a while can be a reasonable choice, so long as you get the match and then revisit it. If you were auto-enrolled and want out, many plans allow you to withdraw those first contributions within a limited window, commonly somewhere between 30 and 90 days. Check your plan's terms, because the window is specific to it and the tax treatment can differ.

One small, easily missed point: check whether your automatic contributions go in as pre-tax or Roth. Defaults are most often pre-tax, but plans can choose, and it changes how the money is taxed later.

Part-time workers

The rules for part-time employees have also shifted. Under SECURE 2.0, a long-term part-time employee generally becomes eligible to make 401(k) contributions after working at least 500 hours in each of two consecutive years, down from three years under the earlier rule. Age requirements and plan terms still apply.

If you have been splitting your time across two or three part-time jobs, note that the hours are counted per employer. It is easy to assume you are not eligible anywhere and never check. A short question to each plan administrator costs nothing.

Which employers are exempt

The mandate has a wide set of exceptions, which is why not everyone has been auto-enrolled:

• Plans that existed before December 29, 2022 are grandfathered, and many employers kept things as they were.
• Businesses with 10 or fewer employees.
• Businesses in existence for less than three years.
• Government plans and church plans.
• SIMPLE 401(k) plans.

Exempt employers can still choose to auto-enroll, and many do. If your employer is not required to, a missing default is a reason to opt in yourself, not a sign that nothing is expected of you.

A paystub and plan-document checklist

Set aside twenty minutes with your latest paystub and the plan's summary document. Then work through these:

1. Find the deferral line on your paystub and compute your actual percentage (period amount divided by gross pay).
2. Compare it to the plan default stated in the summary plan description. Do they match? If not, someone changed it, perhaps you.
3. Find the escalation rule: the annual step, the date it applies, and the ceiling.
4. Check the match formula and confirm your rate is at least enough to receive all of it.
5. Check the contribution type, pre-tax or Roth, and whether it suits your situation.
6. Look at where the money is invested. Auto-enrolled money often goes into a target-date fund by default. Confirm that is what you want.
7. Note the vesting schedule for employer contributions, which decides when the match becomes fully yours.
8. Write down the date of the next automatic increase so it does not surprise you.

The first time I looked at the deferral line on a paystub, I realized I had never connected it to an actual number I had chosen. It was simply there, the way a utility charge is. That is exactly what a default is designed to be, and it is why it is worth looking at once with fresh eyes.

FAQ

Do I have to stay in the plan if I was auto-enrolled?

No. You can usually change your rate or opt out at any time, and many plans allow a short window to withdraw the first contributions. The exact window and tax treatment depend on your plan.

Will my rate really keep going up every year?

If your plan uses automatic escalation, yes: by one percentage point a year until it reaches the plan's ceiling, which must be at least 10% and no more than 15%. You can usually adjust or stop the increases.

Does the rule apply to my older employer plan?

Probably not. Plans established before December 29, 2022 are generally exempt from the mandate, though they may offer auto-enrollment voluntarily.

Is 10% enough for retirement?

It depends on your age, how long you have been saving, your employer's match and your goals. Ten percent is a common reference point, not a guarantee. A fee-only planner or a retirement calculator can help you test your own numbers.

The default was built by someone else, for everyone. Whether it fits you is a question only you can answer, and it takes about the time of a cup of tea.