new EACA features

[pmacduff]

An ongoing 401k Plan is changing investment vendors and the question has arisen of whether or not they can add auto enroll EACA provisions at this time.

I think the EACA provisions must be first day of the plan year start only (ie. as of January 1st for this plan) and cannot be implemented other times within the plan year.

I've been asked by the advisor if the EACA provisions can be added due to the SECURE Act changes that allow a plan to be set up virtually any time now. 

I am correct in that would be if it was a brand new plan, if the client is adding EACA to an existing plan it still needs to be effective with a Jan 1st date?

Thanks in advance.

 

[justanotheradmin]

I have never heard of a 1st day plan rule for an EACA. Are you thinking of QACA?

[Bill Presson]

To get the EACA tax credit under SECURE, it does have to be added the first of the year. It can't be added later.

[justanotheradmin]

32 minutes ago, Bill Presson said:

To get the EACA tax credit under SECURE, it does have to be added the first of the year. It can't be added later.

Upon further reading  - I do agree that in order to be an EACA it has to be in place for the first of the year. 

See the section on mid-year adoption here: https://www.irs.gov/irb/2009-12_IRB

However - I think it's inaccurate to say the SECURE act credit requires it. It' doesn't qualify as an EACA if it isn't in place for the full year, it's a condition to meet to be an EACA, not a condition to meet for having the credit. I would not want a sponsor to think they could adopt an EACA mid-year and have it satisfy the EACA requirements if they were willing to forego the credit. 

[G8Rs]

You may want to see this thread. It’s OK to add a EACA mid-year as long as it’s limited to new participants. But you can’t use the 6 month corrective distribution provision. 

[Eve Sav]

OK to add mid-year automatic enrollment for newly eligible only, and it can be an EACA for purposes of do-over withdrawal.

You can sweep in existing participants effective 1st day of next Plan Year, and then it is an EACA for purposes of do-over withdrawals AND for extension of refund period.