ACA - not an EACA or a QACA and Notice Requirements

[CLE401kGuy]

Is any type of notice required to participants in a plan that has simply an ACA? I believe the answer is no and notice requirement only applies to EACA and QACA per IRS website

Under just an ACA, can a participant request refund of their elective within the first 90 days or is that just under an EACA? It appears this is just under an EACA (and the 10% early withdrawal penalty does not apply).

Can the participant request a distribution of elective in the first 90 days under an ACA at all? My thought would be, No, their funds have to stay in the plan until there is a distributable event.

Thanks!

[Belgarath]

I'll make an assumption here that the plan is subject to ERISA. If so, then I think ERISA 514(e)(3) requires a notice. I agree that if it isn't an EACA, no 90 day withdrawal provision is permissible.

Off the top of my head, I'm not sure why anyone would generally choose an ACA as opposed to the EACA, but I'm sure there are some good reasons that people will point out.

[BG5150]

I think in an ACA you only have to tell them once you are going to do it. With EACA, you have to give a notice every year.

EACA has to be for the entire year, ACA can be implemented at any time.

The Sponsor may not want the headache of processing the 90-day distributions.

[Belgarath]

"I think in an ACA you only have to tell them once you are going to do it. With EACA, you have to give a notice every year.

EACA has to be for the entire year, ACA can be implemented at any time.

The Sponsor may not want the headache of processing the 90-day distributions."

A couple of observations, FWIW.

First statement - getting hyper-technical, the notice requirement only applies to "covered employees." So initial notice is required, then annual notice is required to covered employees - and I maintain that applies to an ACA or a EACA. Now, depending upon how the plan is written, anyone there who already made an election may not be a "covered employee" for purposes of the notice requirement. Personally, I think this is a potential administrative and compliance nightmare, and I'd provide an annual notice to everyone, whether technically required or not.

Second statement, generally agree, although a EACA may be implemented mid-year if it applies ONLY to new employees after the effective date of the EACA.

Third statement - absolutely agree, although the return of contributions is optional under a EACA, so avoiding this doesn't mean you must implement an ACA instead.

As an aside, an ACA requires a QDIA, whereas an EACA does not. (I don't know if this was intentional or an oversight) - but personally, I can't quite see why a fiduciary would choose NOT to utilize the QDIA for fiduciary protection,but again, there may be lots I haven't thought of...