SECURE 2.0 Is Reshaping Open Enrollment for 2025

Introduction

Open enrollment in 2025 is no longer routine. SECURE 2.0 quietly rewired how retirement plans work, who gets enrolled, and how much employees can contribute. For employers, this is not just a legal update. It is an operational test. Get it right and you improve participation and retention. Get it wrong and you invite compliance issues and employee confusion.

Automatic Enrollment Is Now the Default

For years, auto enrollment was optional. Under SECURE 2.0, that changes for many new retirement plans.

If you adopted a new 401(k) or 403(b) plan after late 2022, you are generally required to automatically enroll eligible employees starting with the 2025 plan year. Employees can still opt out or change their contribution rate, but enrollment must happen by default.

Plans must start employees at a preset contribution rate within a defined range and then automatically increase that rate each year until it reaches a higher target level. The exact percentages depend on plan design, but the concept is fixed. Inaction now equals participation.

This flips how open enrollment works. Instead of convincing employees to join, employers must clearly explain how the plan works, how to opt out, and how to adjust contributions. Payroll accuracy and system testing matter more than ever in year one.

Catch Up Contributions Are Expanding for Early Sixty Employees

SECURE 2.0 adds a new layer to catch up contributions beginning in 2025.

Employees roughly between ages 60 and 63 may be allowed to contribute more than the standard age 50 catch up limit. This higher cap is designed to help workers boost savings right before retirement. The limit is tied to the existing catch up amount and adjusts over time.

Employers are not required to adopt the higher limit, but if they do, systems must be able to handle it correctly.

Why This Complicates Open Enrollment

Benefits materials now need to explain multiple contribution tiers. Age 50 rules still apply. Early sixties rules may apply differently. The window is short and easy to misunderstand.

Payroll and recordkeeping systems must correctly identify employee age, apply the right limit, and stop contributions at the correct threshold. If systems are not aligned, errors will surface during open enrollment when elections spike.

For older workforces, this change can be a strong retention tool. But only if it is communicated clearly and administered cleanly.

Long Term Part Time Workers Gain Retirement Plan Access

SECURE 2.0 also expands eligibility for long term part time employees.

Starting with 2025 plan years, employees who work a reduced but consistent number of hours over a shorter service period must be allowed to contribute to the plan. This applies even if they never meet traditional full time eligibility rules.

That means open enrollment may include employees who have never been eligible before. Many may be hourly, younger, or new to retirement planning.

Employers will need simpler communications, clearer explanations, and better hour tracking. Recordkeepers should be looped in early to manage additional accounts and potential cost impacts.

This shift supports equity and retention goals, but it adds administrative complexity that should not be underestimated.

What Employers Should Do Before Open Enrollment

SECURE 2.0 changes arrive all at once. Employers should act early.

Review plan design and confirm whether auto enrollment and enhanced catch up contributions apply. Align payroll, HR, and recordkeeping systems before elections open. Rewrite open enrollment materials to reflect default enrollment, new limits, and expanded eligibility. Test everything.

Waiting until forms go out is how mistakes happen.

Conclusion

SECURE 2.0 turns open enrollment in 2025 into a real stress test. Automatic enrollment becomes mandatory for many plans. Catch up rules get more nuanced. Part time workers gain access. Employers who prepare now can turn compliance into a participation win. Those who delay will be fixing avoidable problems under deadline pressure.