ACAs, QACAs & EACAs

[Tom Poje]

Rev Ruling 2009-30 adds the following to our jumbled knowledge of Automatic Enrollments.

There are 2 'situations' provided

Situation 2

The annual increase does not have to be the first day of the plan year. This example uses April 1 rather than the plan year begin date of January 1, because salary increases are enacted on April 1.

Situation 1

I am not sure who dreamed this one up. the increase is the greater of 1% or a number of percentage points calculated as 30% of the percentage increase in the base pay. (rounded to the nearest whole percentage)

In this example the plan is not intended to be a QACA or an EACA, so the increase does not have to meet the uniformity requirement (e.g. some people will increase 1% each year, but someone with a big salary increase would increase 2 or more- definitely non-uniform for 2 people who otherwise have the same number of year, etc )- so the odd annual increase is ok.

C'mon - which one of you characters out there are setting up plans like this?

[Guest Sieve]

I'm a Situation 2 guy, and actually have a number of TPA-designed plans where auto enrollment and/or escalation do not occur at the start of a plan year. But I've not yet come across a design similar to Situation 1.

[Guest Sieve]

Tom --

You might be interested to know that one of the presenters at this afternoon's IRS 401(k) phone seminar pointed to someone at BenefitsLink poking fun at Situation 1 of Rev. Rul. 2009-30. Refering to you, I presume.

My recollection of the explanation is that Situation 1 was simply meant as an example of non-uniformity, with no direct reference to any live character, living or dead.