View 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.