Eligible Automatic Contribution Arrangements (EACA)

datePosted on 12:53, September 12th, 2010 by lee

The PPA allows plan sponsors state preemption for automatically enrolling employees without written consent just by maintaining an “ERISA” qualified plan and providing notice to employees.  There are two types of automatic contribution arrangements under the PPA: Eligible Automatic Contribution Arrangements (EACA) and Qualified Automatic Contribution Arrangements (QACA).  In this blog we will discuss the EACA.  

Eligible Automatic Contribution Arrangements (EACA) 

If employers apply a uniform automatic contribution percentage for all employees, invest the contributions in a Qualified Default Investment Alternative, and provide the required notices to employees they are rewarded as follows: 

1. The employer will have up to six months after the end of the plan year to perform nondiscrimination tests and make corrections; and

2.  Employer may refund 401(k) deferrals for those employees who do not want to participate and failed to opt out, within 90 days after automatic enrollment begins

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