When does disabling "Store passwords using reversible encryption" in Active Directory take effect?

In active Directory - If I currently have "Store passwords using reversible encryption" enabled and then disable it:

1. Does this take effect immediately for all users and immediately store their password in irreversible encryption?
-or-
2. Will their current password be stored in reversible encryption until they change it and THEN it will be stored in irreversible encryption?

Thanks!