ECOM CPA Blog
SECURE 2.0 quietly changed how new retirement plans have to work, and the rule is now in effect. If your ecommerce business started a 401(k) after December 29, 2022, it generally has to enroll employees automatically once the plan year begins. A lot of founders either do not know this applies to them or assume it does not. Some are right about that. Some are about to age out of the exemption without noticing.
What the mandate actually requires
Plans created after December 29, 2022 have to auto-enroll eligible employees for plan years starting in 2025 and later. The starting contribution rate has to be at least 3 percent, and it has to step up by 1 percent each year until it reaches at least 10 percent, capped at 15. Employees can still opt out, and they get a 90-day window to pull back money that was auto-enrolled if they never wanted in.
The point is participation by default. Left to their own paperwork, plenty of workers never sign up. Auto-enrollment flips that, which is good for your staff and a little more admin for you.
The exemptions, and why they expire
Here is where founders relax too early. The mandate does not apply to a business that is three years old or younger, to an employer with 10 or fewer employees, to church or government plans, or to any plan that already existed before December 29, 2022. That covers a large share of small sellers.
The catch is that two of those exemptions are temporary by nature. A company that is three years old will turn four. A seller with 9 employees will hire an 11th during a good Q4. When either happens, the exemption falls away and the plan has to add auto-enrollment. The rule does not send a reminder. It is on you to catch the year you cross the line.
There is also a paperwork deadline worth putting on the calendar: employers generally have until December 31, 2026 to formally adopt these changes by plan amendment, even though the operational rules already apply. Running the feature correctly now and amending the document later is fine. Doing neither is not.
What to check
If you started a plan in 2023 or later, confirm with your provider that auto-enrollment is switched on and that the annual step-up is configured, not just the initial 3 percent. Providers do not always turn this on for you.
If you have been leaning on the small-employer or new-business exemption, write down exactly when it ends: your fourth anniversary, or the headcount that tips you past 10. Tie it to your hiring plan so it does not surprise you mid-year.
And if you have been putting off starting a plan at all, know that any new one you open now comes with this feature built in. That is not a reason to wait. A plan with a match is still one of the cleaner tax moves available to a profitable founder, and the auto-enrollment piece is mostly a setup step your payroll and provider handle once.
We help ecommerce owners weigh retirement plan options against the rest of their tax picture. If you are not sure whether this mandate touches your plan, that is a short conversation worth having before year-end.
