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Showing results for tags '401(k)(13) auto enroll'.
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Client has a QACA which includes an intial deferral percentage of 3%, and subsequent annual increases at 1% to a maximum of 6%. It's now considering changing the QACA formula effective 1/1/16 but only for new hires. The initial deferral pecentage will be 6%, with 1% annual increases to a maximum of 10%. It does not want to apply this new formula to anyone hired before 1/1/16. The regulations require that the deferral percentage be uniform for all employees, except that it may vary based on the number of years (or portions of years) since the beginning of the initial period for an eligible employee. The initial period begins when the employee first has contributions made pursuant to a default election under an arrangement that is intended to be a qualified automatic contribution arrangement for a plan year and ends on the last day of the following plan year. The regulations would seem to preclude maintaining the two differnt formulas. Has anyone seen informal guidance from the IRS that would allow different formulas for different groups? Could the different formula's be used if the group covered by each formula passes 410(b)?
