Details of the SECURE Act - Part Eight: QACA Increase Auto Enrollment Cap


In late December of 2019 President Trump signed into law a budget bill to fund the government for the remainder of the fiscal year. Included as an addition to the bill was the SECURE Act (Setting Every Community Up for Retirement Enhancement Act of 2019). Some of the changes within the SECURE ACT impacted the automatic contribution provisions for Qualified Automatic Contribution Arrangements.

Section 102 of the Act amends the tax laws to increase the auto enrollment cap to 15%.

The Pension Protection Act of 2006 established Qualified Automatic Contribution Arrangement plans.  These plans are safe harbor plan with automatic enrollment provisions. Prior to the SECURE ACT, the plans would automatically enroll eligible participants at 3% with a 1% increase each year up to a maximum of 10 % unless the participant takes the necessary steps to opt out.  This type of plan design has proven to increase participation due to the fact that employees will not take the time or steps necessary to opt out of the automatic contribution. 

Effective for tax years beginning after December 31, 2019, the SECURE ACT increased the 10% maximum automatic enrollment cap to 15% in the hope that more American workers will be retirement ready. 

Author comment: There has been a question that the minimum 3% contribution may mislead the employee into think they are saving enough for retirement when in fact they will fall short of their retirement goals.  

This is the eighth in a series of articles describing the various Sections of the SECURE Act, the practical impact of each Section and the due dates for implementing the changes. To view a summarized article of the SECURE Act as a whole, or a list of the articles we have published thus far detailing the different provisions, please see our prior article The Secure Act.


Leisha Gosling has worked for over 30 years in the field of Defined Contribution Plan Administration. She graduated from the University of Louisville with a Bachelor of Science in Business Management and from Sullivan University with a Master’s degree in Business Administration. Leisha joined RMS as a New Business Consultant in 2020. Her areas of expertise include qualified retirement plan administration and consulting, plan document underwriting, and compliance. She focuses the majority of her time at RMS on new client implementation and onboarding as well as marketing and new business initiatives. She also maintains the plan document used by the firm and performs special research projects. Leisha has been awarded the designations of Qualified 401(k) Administrator and Qualified 401(k) Consultant from the American Society of Pension Professionals & Actuaries and Certified Employee Benefits Specialist from the International Foundation of Employee Benefit Plans.

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