Retirement Plan Reset: New Law Automatically Re-enrolls Opt-Out Workers After Three Years

The new Auto Reenroll Act of 2025 is designed to nudge people back into saving for retirement, even if they previously decided to stop. Essentially, this bill changes the mechanics of how automatic enrollment retirement plans—known as Qualified Automatic Contribution Arrangements (QACAs) and Eligible Automatic Contribution Arrangements (EACAs)—handle employees who opt out.

The Three-Year Retirement Timer

If you work for a company that uses an auto-enrollment 401(k) plan (a QACA or EACA) and you chose to stop contributing—you actively opted out—that decision is no longer permanent. Under Section 2 of this Act, that opt-out election will now automatically expire after three years or less. Once it expires, you are treated as if you just signed up for the plan, meaning contributions will automatically start coming out of your paycheck again at the plan’s default percentage, unless you actively make a new election to stop contributing.

This is a big deal because it tackles the inertia problem. Think of the employee who opted out three years ago when they were paying off student loans or saving for a down payment. Now that those financial pressures might have eased, they often forget or simply don’t get around to re-enrolling. This new law forces the issue, putting them back on the savings track. The plan administrator can apply this re-enrollment uniformly to all affected employees during a specific plan year, simplifying the administrative side.

The Upside: Building Wealth by Default

The primary benefit here is increased retirement security. Automatic enrollment plans work because they rely on human inertia—most people simply don’t opt out. This bill extends that benefit to employees who made a temporary opt-out decision. For example, if a 30-year-old construction worker opted out of their EACA for three years to cover high childcare costs, this law ensures they don't miss out on another 30 years of compounding returns just because they forgot to fill out a form to re-enroll.

This change also updates the Employee Retirement Income Security Act (ERISA) to ensure that plans don't lose their special status just because they implement this new automatic re-enrollment feature after the three-year mark. This provides regulatory clarity for plan sponsors.

The Downside: Watch Your Paycheck

While the goal is positive, there is a practical concern for the employee who opted out for a good reason and still needs that full paycheck. If you opted out three years ago because you are still dealing with high medical bills or are running a tight budget, the plan will resume deductions automatically. If you don't actively monitor your pay stubs or the notices from your plan administrator, you might be surprised when your take-home pay suddenly drops because contributions have resumed. For people living paycheck to paycheck, even a small deduction can cause a cash flow headache. The onus is now on the employee to be aware of the three-year deadline and re-opt out if they still cannot afford to contribute.

In short, the Auto Reenroll Act of 2025 is a powerful tool to boost retirement savings by making temporary opt-outs truly temporary. It’s a classic example of using policy to counter human forgetfulness, but it requires employees who truly can’t afford contributions to stay vigilant and actively manage their status every three years.