August 21, 2013 (PLANSPONSOR.com) – The Internal Revenue Service (IRS) has updated a web page explaining retirement plan sponsors’ options for automatically increasing participants’ deferrals.
plan can automatically increase salary deferral contributions for participants
if it has or adopts an automatic contribution arrangement (auto enrollment)
feature. Plan sponsors have flexibility over when employees’ contributions will
automatically increase and by how much, depending on the plan’s type of
automatic contribution arrangement.
differ for basic automatic contribution arrangements, eligible automatic
contribution arrangements (EACAs) and qualified automatic contribution
arrangements (QACAs). By meeting all QACA requirements, a plan is exempted from
the annual actual deferral percentage and actual contribution percentage
nondiscrimination testing requirements.
web page includes a link to Notice 2009-65, which contains two sample amendments
for adding a basic automatic contribution arrangement with automatic
contribution increases or an eligible automatic contribution arrangement with
The web page is at http://www.irs.gov/Retirement-Plans/Automatic-Contribution-Increases.