Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
On February 24, the Internal Revenue Service (IRS) published in the Federal Register its final rule regarding automatic contributions to 401(k) plans and similar types of defined contribution plans. Such automatic enrollment features were established by the Pension Protection Act (Pub. L. No. 109-280), which amended the tax code to facilitate automatic enrollment for 401(k) plans, Section 403(b) tax-deferred annuity plans, Section 457(b) governmental plans, and similar arrangements. These regulations affect administrators of, employers maintaining, participants in, and beneficiaries of section 401(k) plans and other eligible plans that include an automatic contribution setup. Among other things, the regulations clarify minimum percentage requirements for qualified automatic contribution arrangements (QACA), expand uniformity requirements, and establish a notice timing requirement.
The final regulations relating to qualified automatic contribution arrangements apply to plan years beginning on or after January 1, 2008. The regulations relating to eligible automatic contribution arrangements apply for plan years beginning on or after January 1, 2010.