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(Cheese and) QACAs plus EACAs


zimbo

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In reading PPA and then reading the QDIA Regs and the Auto Enrollment proposed Regs, some questions arise. Note that EACA= Eligible automatic contribution arrangement and QACA=Qualified Automatic Contribution Arrangement:

1. To take advantage of the ERISA preemption over state laws, and the 90 days distribution rules, and the 6 month failed ADP Test timing, a plan must meet the EACA rules, correct?

2. Are all QACAs also EACAs? Why would anyone have a QACA that is not a EACA?

3. Must a EACA use a QDIA (qualified default investment alternative)? If so, doesn't that effectively mean that all auto enrollment plans MUST abide by the QDIA requirements?

4. While it is true that a plan may not take distribution fees from a QDIA in the first 90 days after auto enrollment for those getting distributions upon "reversing" their enrollment, the auto enrollment proposed regs seem to allow distribution fees in exactly the same scenario. Does that mean that a plan CAN take distr fees if the auto enrollee had not used the default investment but instead had chosen a particular fund(s) after his enrollment?

MANY THANKS

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