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ACAs EACAs in SARSEPS & SIMPLE IRAs


jevd
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I can’t tie in the reference in 1.414(w)-1 (e)(1) (iv) & (v) (Final Regs issued 2-24-09) to SARSEPS & SIMPLE IRAS back to a section that establishes the ability of setting up ACAs, or EACAs for those plans. Do the definitions apply to the entire set of regs or just to section 414(w). I thought I was pretty good at interpreting these cross references but it seems something is lacking either in the regs or my understanding.

Does anyone have a specific site or cite I can refer to as a basis to allow ACAs or EACAs in SARSEPs or SIMPLEs.

Thanks

JEVD

Making the complex understandable.

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  • 2 weeks later...
Guest BruceC
I can’t tie in the reference in 1.414(w)-1 (e)(1) (iv) & (v) (Final Regs issued 2-24-09) to SARSEPS & SIMPLE IRAS back to a section that establishes the ability of setting up ACAs, or EACAs for those plans. Do the definitions apply to the entire set of regs or just to section 414(w). I thought I was pretty good at interpreting these cross references but it seems something is lacking either in the regs or my understanding.

Does anyone have a specific site or cite I can refer to as a basis to allow ACAs or EACAs in SARSEPs or SIMPLEs.

Thanks

No one else has responded, so let me offer this.

The purpose of QACA and EACA is to allow the ER a safe harbor from the annual ADP/ACP testing that would otherrwise be required. SIMPLEs are exempt from these tests already, so why might an employer offering a SIMPLE also want to offer automatic EE contributions?

BruceM

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I can’t tie in the reference in 1.414(w)-1 (e)(1) (iv) & (v) (Final Regs issued 2-24-09) to SARSEPS & SIMPLE IRAS back to a section that establishes the ability of setting up ACAs, or EACAs for those plans. Do the definitions apply to the entire set of regs or just to section 414(w). I thought I was pretty good at interpreting these cross references but it seems something is lacking either in the regs or my understanding.

Does anyone have a specific site or cite I can refer to as a basis to allow ACAs or EACAs in SARSEPs or SIMPLEs.

Thanks

No one else has responded, so let me offer this.

The purpose of QACA and EACA is to allow the ER a safe harbor from the annual ADP/ACP testing that would otherrwise be required. SIMPLEs are exempt from these tests already, so why might an employer offering a SIMPLE also want to offer automatic EE contributions?

BruceM

Thanks for that insight. However in a SARSEP testing is required and the final regulations specifically include SIMPLE IRAs and SARSEPS as eligible plans for the withdrawal safe harbor under 414(w) . ( no penalty etc.) Why if not needed? And where is the authority for an ACA or EACA in those plans? We have the ability to drink(withdraw) but an empty keg! No Party!

JEVD

Making the complex understandable.

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