The big SECURE Act 2.0 changes mandated for 401(k) plans are still rolling out—and 2025 is no exception. With new rules around auto-enrollment, catch-up contributions, and long-term part-time employee eligibility, as a plan sponsor, you’ll need to be prepared to show that you implemented these changes, come audit time. Auditors will look for updated documentation and processes. But don’t worry! We’re breaking down what you’ll need to provide… and what to do if you’re not quite there yet. 😉
Key SECURE Act 2.0 changes impacting your 401(k) audit in 2025
1. Expanded auto-enrollment requirements
Newly established 401(k) plans (any formed after December 29, 2022) must now automatically enroll employees at a minimum contribution rate of 3%, up to a maximum of 10%, with an automatic 1% increase each year until it reaches at least 10% but not more than 15%. (The employee, of course, can opt out of these automatic escalations anytime).
If your company has a new-ish 401(k) plan, you’ll need to show auditors that your payroll and recordkeeping systems are handling this correctly.
📝 What auditors will look for:
- Plan documents reflecting auto-enrollment and escalation policies
- Payroll records showing automatic deductions (or employees’ opt-out of them)
- Communication materials sent to employees about their enrollment
🚀 If you’re not ready yet:
- Talk to your payroll provider now to ensure auto-enrollment is correctly set up
- Update plan documents to reflect these changes
- Educate HR teams on how to explain auto-enrollment to employees
- Set up automatic procedures correctly: read our articles on auto-enrollment and auto-escalation.
2. Catch-up contribution adjustments
If employees make over $145,000 annually, their catch-up contributions must go into a Roth (after-tax) account. This means your plan needs to be able to distinguish high earners and route their contributions correctly.
📝 What auditors will look for:
- Payroll records showing that high earners’ catch-up contributions go into Roth accounts
- Updated plan documents reflecting this change
- Employee notifications explaining the Roth requirement
🚀 If you’re not ready yet:
- Work with your payroll provider to set up Roth tracking for high earners
- Update plan documents and communicate changes to employees
- Ensure your recordkeeper can properly process Roth contributions
3. Long-term part-time employee eligibility
Employees who work at least 500 hours per year for two consecutive years must be allowed to participate in your 401(k) plan. This is a change from the previous three-year requirement, so more employees will likely become eligible.
📝 What auditors will look for:
- Updated tracking of part-time employee hours
- Documentation showing when eligible employees were offered plan participation
- Proof that employees were notified about their eligibility
🚀 If you’re not ready yet:
- Update tracking systems to flag part-time employees reaching eligibility
- Work with HR to ensure proper communication about enrollment
- Confirm with your recordkeeper that part-time employees can be added seamlessly
4. Emergency savings accounts linked to 401(k) plans
The SECURE Act 2.0 allows for employer-sponsored emergency savings accounts tied to 401(k) plans, with specific contribution limits and withdrawal rules. If your company offers this, auditors will be checking for compliance.
📝 What auditors will look for:
- Clear plan documentation on emergency savings provisions
- Records showing how contributions are being handled
- Participant communication explaining the benefit and guidelines
🚀 If you’re not ready yet:
- If implementing an emergency savings feature, update plan documents
- Ensure recordkeeping and payroll systems can manage the accounts properly
Getting ahead of your 401(k) plan audit in 2025
If your company sponsors a 401(k) plan, the best thing you can do is be proactive. Audits can be stressful and time-consuming, but with the right preparation, they don’t have to be. Here’s how to make your audit smoother:
✅ Organize your documents – Have plan documents, payroll records, and communication materials ready to go. Need a handy checklist? Here you go.
✅ Talk to your service providers – Make sure your payroll provider, recordkeeper, and third-party administrator are aligned on the new requirements.
✅ Run an internal compliance check – Do a self-audit to see if you’re meeting the new rules before your official audit happens.
✅ Educate your team – Ensure HR, payroll, and benefits staff understand what’s changing and how to communicate it to employees.
Wrapping up
The SECURE Act 2.0 is changing the 401(k) landscape, and your upcoming 401(k) plan audit will reflect those shifts. While compliance might seem daunting, the key is getting ahead of the game. By updating your processes now, working closely with your service providers, and keeping clear and consistent documentation, you’ll be in great shape when audit season rolls around.
Got questions about getting your plan audit-ready? Start by talking to your payroll provider and plan administrator—and your friendly neighborhood auditor! We’re here to help. Contact Cassell Plan Audits for next steps.
