New regs have been released for companies implementing automatic enrollment and contribution programs for their employees. The new regs cover several key issues for both Qualified Automatic Contribution Arrangements (QACA) and Eligible Automatic Contribution Arrangements (EACA). The final regs for QACAs are in effect for plan years begining on or after Jan. 1, 2008. For EACAs, the rules are effective for plan years beginning on or after Jan. 1, 2010.

Here are the key points:

QACAs

• Minimum percentage requirements — Plans must have a schedule of automatic contributions pr “qualified percentages” for eligible employees. They start at 3% for the intial period an employee is in the plan (up to two years). Following the intial period, the minimum qualified percentage increases by 1% point each year, for three years. The qualified percentage can never exceed 10% of an employee’s compensation.
• Uniformity requirement — The qualified percentage has to be applied to all eligible employees.
• Default and/or Affirmative elections — Default elections no longer apply to employees if they make an affirmative election to either not have contributions made or to make contributions at another percentage.

EACAs

• Withdrawal elections — Elections to withdraw contributions made under an EACA must be made within 90 days of the first elective contribution an employee makes.
• Non-universal eligible automatic contribution arrangements — Under an EACA, automatic enrollment doesn’t have to apply to all employees. It can apply only to those employees designated as covered by the company’s specific EACA.

You can download the regulations in their entirety and get all the nitty-gritty details here.

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