QACA Auto Increases

[austin3515]

Must the auto increases in a QACA take place on the first day of the Plan Year?  The regulations regarding increases are worded that way, but I wonder if it is permissible to allow the increases earlier than the first day of a plan year.

We're taking over a plan that added QACA 1/1/2017, with the first increase scheduled for 9/30.  As such, the increases will always be a little earlier than is required by the regs.

[K2retire]

We have a client who chooses to do increases on 7/1 to coincide with their salary increases. It is a calendar year plan, but EACA, not QACA.

[Kevin C]

Austin, what part of the regs are you reading as requiring the increases to take place on the first day of the plan year?  I see that the minimum percentage requirements change on the first day of the plan year, but that's only the minimum. It seems that with the increases taking effect earlier, you wouldn't have any problem satisfying the minimum percentage requirements.

[austin3515]

That's what I think too, exept Corbel's document won't let me elect anything else.  And yes, that's where I pulled it from.  I copied and pasted if anyone else is curious. 

From the QACA Regs:

(ii) Minimum percentage requirements—(A) Initial-period requirement. The minimum percentage requirement of this paragraph (j)(2)(ii)(A) is satisfied only if the percentage that applies for the initial period is at least 3 percent. For this purpose, 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.

(B) Second-year requirement. The minimum percentage requirement of this paragraph (j)(2)(ii)(B) is satisfied only if the percentage that applies for the plan year immediately following the last day described in paragraph (j)(2)(ii)(A) of this section is at least 4 percent.

(C) Third-year requirement. The minimum percentage requirement of this paragraph (j)(2)(ii)(C) is satisfied only if the percentage that applies for the plan year immediately following the plan year described in paragraph (j)(2)(ii)(B) of this section is at least 5 percent.

(D) Later years requirement. A percentage satisfies the minimum percentage requirement of this paragraph (j)(2)(ii)(D) only if the percentage that applies for all plan years following the plan year described in paragraph (j)(2)(ii)(C) of this section is at least 6 percent.

[Kevin C]

Maybe you need a new document 

ASC's VS document has this in the base document:

Quote

The Employer may elect under AA §6A-8(a)(5) to apply the automatic increase described under this subsection (i) as of a date other than the beginning of the Plan Year. If a date other than the first day of the Plan Year is selected under AA §6A-8(a)(5), the Plan still must satisfy the minimum deferral percentage requirements under this subsection (i) as of the beginning of the periods designated above. Thus, if an automatic increase becomes effective as of a date within a Plan Year, the Plan must provide for an automatic deferral percentage at least equal to the minimum percentage as of the designated date in the Plan Year commencing before the Plan Years described under (B) – (D) above. See Rev. Rul. 2009-30.

 

[austin3515]

Mine does not have that...  Frustrating...