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Showing results for tags 'qaca'.
Found 5 results
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We are looking into taking over the third party administration of a plan that currently has a QACA that utilizes the 3% non-elective contribution safe harbor method that vests after two years of vesting service. We are exploring changing the ADP safe harbor method to traditional 3% non-elective which is 100% vested immediately, but if the administrator is already successfully administering the QACA, I am thinking this may not be in their best interest? I think my question is, "is the ability to administer the QACA properly the only difference between a two year difference in vesting requirement, or are there other considerations?" A two year vesting schedule seems like a huge benefit for a small trade-off. The end goal of the program design is to add nonsafe harbor non-elective contributions to the plan and potentially also adopt a DB plan, I want to use the QACA safe harbor contributions towards top-heavy and 401(a) testing if i can, and if it makes sense to continue to maintain the QACA. -
I'm working with a plan that is considering implementing a QACA SH match on 1/1/2019, but they would also like to match additional contributions over the QACA match. Specifically, they want to match 50% of contributions on deferrals between 7-10% - auto escalating up to 10% using the QACA AE provision. They want to try and get total employee contributions over 15%, but encourage it with the discretionary match over the QACA formula. is the discretionary match subject only to ACP? are there other considerations with offering this additional match above the SH match limit? any help would be appreciated.
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Please help set me straight. I totally confused myself with a QACA that excludes bonuses and car allowances for all contributions, including elective deferrals and the QACA basic matching contributions. I know that compensation eligible for the deferrals must be safe harbor compensation defined in section 414(s) and 1.414(s)-1. I'm confused if the plan may use this definition of compensation and pass the 414(s) nondiscrimination test each year to determine this definition of compensation satisfies section 414(s) (under 1.414(s)-1(d)(1) or if the plan by design cannot exclude these types of compensation and can only modify the compensation under the rules in section 1.414(s)-1©. Please confirm if the plan design to exclude these types of compensation is permitted under a QACA and performing the 414(s) test is the acceptable method to determine the definition of compensation is nondiscriminatory.
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I met with a prospect yesterday who is using an unnamed payroll provider for administration of their plan. The prospect started their plan on 1/1/2015. It is a QACA Safe Harbor Match(100 on 1% and 50% up to 6%) with automatic enrollment at 3% and auto escalation of 1% up to the level of 6%. Two Owners, 10 Employees. Prospect was told by unnamed payroll company that they must stop their deferrals because the plan is top heavy. My understanding is that the QACA SH Match works like the Basic Safe Harbor Match and Non-Elective in that the plan is deemed to pass top heavy unless the client makes additional discretionary contributions. I am still completely confused as to why the payroll company notified the client that they had to stop deferrals(10,000 each). I just want to make sure I am not missing something here. Thoughts on how to advise the prospect on how to communicate with the payroll company? We will be taking over administration in 2016, I am pretty certain of that.
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Can the start of auto enrollment be pushed out or does it have to start within a certain period from meeting eligibility in the plan? Suppose a company currently has a Safe Harbor plan with one year eligibility and a QACA/auto enrollment feature in place. If the company wanted to offer immediate eligibility but did not want the auto enrollment feature to kick in until the second year of employment/eligibility, would that be allowable? This might create more of burden with explaining it in the annual notice, but otherwise I'm not able to find a specific citation that would prevent such a delay in starting the auto enrollment. In describing the minimum initial percentage, the regulations (I'm looking at 1.401(k)-3(j)) do not seem to tie the initial period to eligibility or any specific date. Does anyone see a problem with delaying auto enrollment like this? Thanks!
