Pension Protection Act Blog

For plans implementing a qualified automatic contribution arrangement (QACA) or an eligible automatic contribution arrangement (EACA), notice of the arrangement must be provided to employees at least 30 days before the beginning of each plan year.

The IRS has issued a Sample Notice to comply with this requirement. The Service states that the Sample Notice is for a hypothetical QACA which permits EACA withdrawals and contains other assumptions about the underlying plan document, so the notice may need to be modified to meet the actual plan underlying plan provisions before being provided to employees. For example, the Sample Notice assumes the plan permits loans and hardship distributions, so plans without those provisions will need to modify the notice. The IRS also states that this Sample Notice contains text which will satisfy the information requirement for participant notices under the Dept. of Labor’s recently issued Final Rule under ERISA section 404(c)(5) on qualified default investment alternatives (QDIA).

The Sample Notice is very clearly written and should be easy to customize because it provides fill-in-the-blanks for dates and other variable information. The negative about the Sample Notice is that it is a little long at 4 pages and it will be a little difficult to trim it down to a one-page handout printed on both sides of the paper.

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