Automatic Enrollment for 401(k) Plans – Retirement Plan Update April/May

Automatic Enrollment for 401(k) PlansView This Newsletter: Automatic Enrollment for 401(k) Plans

Overview:

  • Automatic Enrollment for 401(k) Plans
    • Popularity of auto-enroll
    • Separating hyperbole from helpful
  • What is Automatic Enrollment?
    • Opt-in vs. Opt-out
    • Automatic escalation
  • Eligible Automatic Contribution Arrangement (EACA)
    • Two special features
      • Deadline extension for corrective refunds
      • 90 day grace period to withdraw automatic deferrals
  • Qualified Automatic Contribution Arrangement (QACA)
    • Combines safe harbor 401(k) features with auto-enroll
      • Passes testing
    • Required minimum employer contributions
      • Non-elective profit sharing vs. matching contributions
  • “Generic” Automatic Enrollment
    • Greatest flexibility
    • No special features
  • Why Automatic Enrollment?
    • Prevent a Testing Failure
      • Effect of auto-enroll on ADP Test
    • Help employees accumulate meaningful retirement savings
      • Small automatic deferrals not enough to retire on, but better than nothing
      • Creates a culture of savings

 

Pinnacle Plan Design is a third-party administrator (TPA) for employer-sponsored qualified retirement plans. We specialize in retirement plan design, administration and actuarial consulting for 401(k)/profit-sharing plans, defined benefit plans, cash balance plans, and 403(b) plans. Pinnacle Plan Design proudly serves businesses nationwide.

 

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