Automatic Escalation

[Guest Lori Dillingham]

Does automatic escalation have to be effective as of the first day of the plan year?

[John Feldt ERPA CPC QPA]

If you are talking about the 'new' safe harbor plan type that uses the automatic escalation from 3% to 4% to 5% etc. (a QACA plan), then yes, you need to have that be effective at the beginning of the plan year. Be sure to give the proper notices timely.

If you simply want to be an ACA, not a QACA (ack!), then no, you can adopt the automatic enrollment features and/or the default enrollment escalation features at any time. Be sure to give the proper notices timely.

I'm not sure if that answers the question, but I hope that helps!