Sample Notices (EACA, QACA, QDIA, Safe Harbor)

Arrangements Requiring Notices

If your plan includes any of the arrangements listed below you must distribute initial and annual participant notices providing information about the arrangement. ING has sample participant notices available for your use (see Notice Overview and Sample Notices below). Since the notices are samples, each employer must modify them as needed for their own plan.

  • Qualified Default Investment Arrangement (QDIA)
    Based on Department of Labor (DOL) regulations the employer may select a fund for the investment of participant contributions (in a participant-directed plan), when the participant does not affirmatively elect any investment. Compliance with the QDIA regulations is optional but, if the requirements are met the regulations provide the employer with fiduciary relief for the selection and investment of contributions.
  • Eligible Automatic Contribution Arrangement (EACA)
    Under this program the employer may automatically enroll eligible employees in a participant directed plan and deduct elective deferrals from employees' pay, if employees are provided with proper notice and make no affirmative election to participate or not participate in the plan. The plan may permit the employees to elect to withdraw the elective deferrals within 90 days of the original automatic enrollment date when certain conditions are met. If all eligible employees are included in the program the employer has 6 months instead of 2 1/2 months, after the end of the plan year, to perform and correct the ADP/ACP test.
  • Qualified Automatic Contribution Arrangement (QACA)
    This program is a combination of automatic enrollment and a Safe Harbor ADP/ACP arrangement. A QACA permits the employer to automatically enroll eligible employees in a participant directed plan and begin deducting elective deferrals from the employees' pay if the employees are provided with proper notice and make no affirmative election to participate or not participate in the plan. The regulations require that the elective deferrals be escalated each year unless the participants affirmatively elect a different contribution amount. The plan may permit the participants to elect to withdraw the elective deferrals within 90 days of the original automatic enrollment date when certain conditions are met. Further, under a QACA, the employer must make a specific safe harbor match or nonelective contribution each year to satisfy the ADP/ACP Safe Harbor portion of this arrangement.
  • Automatic Contribution Arrangement (ACA)
    Under this program the employer may automatically enroll eligible employees in a participant directed plan and deduct elective deferrals from the employees' pay, if employees are provided with proper notice and make no affirmative election to participate or not participate in the plan. It differs from an EACA in that 1) the plan may not offer the participant the option for withdrawing the elective contribution within 90 days of the original automatic enrollment date and 2) there is no extension of time offered for ADP/ACP testing.
  • ADP/ACP Safe Harbor Contribution
    To avoid the requirement for annual ADP/ACP testing the employer may make a specified minimum matching or nonelective contribution to the plan if certain requirements are met.
  • Automatic Increase of Elective Deferrals
    Any plan may automatically increase the elective deferrals of participants if the participants are provided with advanced notice and given a reasonable opportunity to opt out or make another contribution election.

Notice Overview and Sample Notices

Combined Qualified Default Investment Arrangement (QDIA) and Eligible Automatic Contribution Arrangement (EACA) Annual and Initial Notices
If your plan uses a QDIA investment fund and also includes an EACA, the QDIA and EACA annual and initial notices for each arrangement can be combined.

Annual Notice - Generally, the combined annual notice requirement is satisfied if the annual notice is provided at least 30 days but not more than 90 days before each plan year. This notice must be distributed to all employees covered by the EACA or QDIA arrangements.

Initial Notice for Newly Eligible Employees - The combined initial notice requirement is satisfied for newly eligible employees if the notice is provided no more than 90 days before the employee becomes eligible, and no later than the date the employee becomes eligible. Alternatively, the combined EACA and QDIA notice can be provided as late as the date of eligibility if the 90 day withdrawal option is available under the EACA. This option permits employees that are automatically enrolled to request their elective deferral contributions be withdrawn and returned, within 90 days from the date the first contribution is deducted from their pay. Please note that failure or refusal to timely distribute the EACA notice may result in civil penalties. Failure to timely provide the QDIA notice may jeopardize the fiduciary relief provided by this arrangement.

Please click on the links below to access a sample EACA notice and two sample QDIA notices that may be used to meet both the annual and initial notice requirements. Each employer should select the QDIA notice sample that best describes the QDIA arrangement to be used under the plan. These are sample notices and are not intended as tax or legal advice. Modifications may be required to meet your plan's particular needs. Please consult with your plan's tax advisor and legal counsel regarding the particular circumstances of your plan.

Sample EACA Notice

Sample QDIA Notice - 1

Sample QDIA Notice - 2

Qualified Default Investment Arrangement (QDIA) and Qualified Automatic Contribution Arrangement (QACA) Annual and Initial Notices - If your plan uses a QDIA investment fund, and also includes a QACA, the QDIA and QACA initial and annual notices for each arrangement can be combined.

Annual Notice - Generally, the combined annual notice requirement is satisfied if the annual notice is provided at least 30 days but not more than 90 days before each plan year. This notice must be distributed to all employees covered by the QACA or QDIA arrangements.

Initial Notice for Newly Eligible Employees - The combined initial notice requirement is satisfied for newly eligible employees if the notice is provided no more than 90 days before the employee becomes eligible, and no later than the date the employee becomes eligible. Alternatively, the combined QACA and QDIA notice can be provided as late as the date of eligibility if the 90 day withdrawal option is available under the QACA. This option permits employees that are automatically enrolled to request their elective deferral contributions be withdrawn and returned, within 90 days from the date the first contribution is deducted from their pay. Please note that failure or refusal to timely distribute the QACA notice may result in civil penalties. Failure to timely provide the QDIA notice may jeopardize the fiduciary relief provided by this arrangement.

Please click on the links below to access a sample QACA notice and two sample QDIA notices that may be used to meet both the annual and initial notice requirements. Each employer should select the QDIA notice sample that best describes the QDIA arrangement to be used under the plan. These are sample notices and are not intended as tax or legal advice. Modifications may be required to meet your plan's particular needs. Please consult with your plan's tax advisor and legal counsel regarding the particular circumstances of your plan.

Sample QACA Notice

Sample QDIA Notice - 1

Sample QDIA Notice - 2


Qualified Default Investment Arrangement (QDIA) and Automatic Contribution Arrangement (ACA) Annual and Initial Notices - If your plan uses a QDIA investment fund and includes an ACA the annual and initial notices for each may be combined.

Annual Notice - Generally, the annual notice requirement is satisfied if the annual notice is provided at least 30 days but not more than 90 days before each plan year.  The notice must be provided to all employees covered by the QDIA or ACA arrangements.

Initial Notice - Generally, the initial notice requirement is satisfied for newly eligible employees if the notice is provided no more than 90 days before the employee becomes eligible, and no later than the date the employee becomes eligible.

Please note that failure or refusal to timely distribute the ACA notice may result in civil penalties.  Failure to timely provide the QDIA notice may jeopardize the fiduciary relief provided by this arrangement.

Please click on the links below to access a sample ACA notice and two sample QDIA notices that may be used to meet both the annual and initial notice requirements.  Each employer should select the QDIA notice sample that best describes the QDIA arrangement to be used under the plan. These are sample notices and are not intended as tax or legal advice.  Modifications may be required to meet your plan’s particular needs.  Please consult with your plan’s tax advisor and legal counsel regarding the particular circumstance of your plan.

Sample ACA Notice

Sample QDIA Notice - 1

Sample QDIA Notice - 2


ADP/ACP Annual Safe Harbor Notice
- If your plan uses the ADP/ACP Safe Harbor Contribution please be reminded that the annual Safe Harbor notice must be distributed to all eligible plan participants at least 30 days before the start of the plan year to which it applies. For example, for the plan year beginning January 1, 2011, the annual Safe Harbor notice must be in the hands of plan participants no later than December 2, 2010 for calendar year plans.

For your convenience attached is a copy of our sample ADP/ACP notice. Please complete the notice as indicated with the information and provisions as they appear in your plan document, then distribute the notice to participants. Please note that a Safe Harbor notice that is not distributed timely may jeopardize the Safe Harbor status of the plan.

Newly eligible employees - For an employee who becomes eligible later than the 90th day before the beginning of the plan year, the timing requirement is deemed satisfied if the notice is given by the employee's date of eligibility (but not earlier than 90 days before the eligibility date). These employees should receive the same annual ADP/ACP Safe Harbor Notice described above; there is no separate notice for newly eligible employees

This is a sample notice and is not intended as tax or legal advice. Modifications may be required to meet your plan's particular needs. Please consult with your plan's tax advisor and legal counsel regarding the particular circumstances of your plan.

Sample Safe Harbor Notice

 

Qualified Default Investment Arrangement (QDIA) Only (no Automatic Enrollment) Initial and Annual Notices - If your plan contains a QDIA fund AND it DOES NOT include an Eligible Automatic Contribution Arrangement, a Qualified Automatic Contribution Arrangement or an Automatic Contribution Arrangement, the attached sample QDIA participant notices may be used.

Annual Notice - The annual notice to participants must be distributed 30 days before the start of the plan year to which it applies. For example, for the plan year beginning January 1, 2010 the annual notice must be in the hands of participants no later than December 2, 2009.

Initial Notice - For participants who become eligible during the plan year the notice must be provided within a reasonable time period of at least 30 days in advance of the date of eligibility, or at least 30 days in advance of the first default investment.

Participants who must receive the QDIA notice - The notice must be distributed to all participants who have contributions invested in the QDIA fund as a result of their failure to make an investment selection. If you are unable to determine which participants were defaulted into the QDIA fund versus those who elected to invest in the QDIA fund the notice may be sent to all participants who are invested in the QDIA fund. To avoid any confusion you may add a cover note to the notice or include a brief explanation in the opening paragraph of the notice to indicate that the notice is not intended to apply to participants who affirmatively elected to invest in the QDIA.

Please click on the links below to access two sample QDIA notices that can be used to satisfy both the initial and annual notice requirements. Each employer should select the sample that best describes the QDIA arrangement to be used under the plan. These are sample notices and are not intended as tax or legal advice. Modifications may be required to meet your plan's particular needs. Please consult with your plan's tax advisor and legal counsel regarding the particular circumstances of your plan.

Sample QDIA Notice - 1

Sample QDIA Notice - 2


Automatic Increase Annual Notice
- If your plan includes an Automatic Increase of Elective Deferrals. Please be reminded that the annual notice to participants must be distributed 30 days before the start of the plan year to which it applies. For example, for the plan year beginning January 1, 2010 the annual notice must be in the hands of participants no later than December 2, 2009. For your convenience attached is a copy of our sample annual Automatic Increase of Elective Deferrals notice. Please review the notice and revise it as appropriate for your plan and then distribute the notice to participants. Note that an annual notice that is not distributed timely may jeopardize the status of the plan with regard to the provision that permits the Automatic Increase of Elective Deferrals.

Please click on the link below to access a sample Automatic Increase notice. This is a sample notice and is not intended as tax or legal advice. Modifications may be required to meet your plan's particular needs. Please consult with your plan's tax advisor and legal counsel regarding the particular circumstances of your plan.

Sample Automatic Increase Only Annual Notice

 

IRS Circular 230 Disclosure
Any tax discussion contained in this communication was not intended or written to be used, and cannot be used by the recipient or any other person, for the purpose of avoiding any Internal Revenue Code penalties that may be imposed on such person. Any tax discussion contained in this communication was written to support the promotion or marketing of the transactions or matter discussed herein. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.

Neither ING or its affiliated companies or representatives offer legal or tax advice. Please seek the advice of a tax attorney or tax advisor prior to making a tax-related insurance/investment decision.

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