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Posted

There is no maximum auto escalate number on an EACA like there is on a QACA, is that right?  So I could auto escalate to 20% if I wanted to?

Austin Powers, CPA, QPA, ERPA

Posted

austin3515, if you are talking about an EACA under Code sec. 414(w) (and not just an ACA), your annual increases have to be based on the number of years the participant has been subject to the arrangement (see Treas. reg. 1.414(w)-1(b)(2)(ii)), but the step minimums and 15% cap that apply to QACAs are not applicable, so yes, you could get to 20% ultimately.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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