Boosting Participation Through QACA Safe Harbor Provisions

Boosting Participation Through QACA Safe Harbor Provisions

A Qualified Automatic Contribution Arrangement (QACA) is a safe harbor design that pairs auto‑enrollment/escalation with mandatory employer contributions and notice rules.

What Is QACA?

A Qualified Automatic Contribution Arrangement (QACA) is a safe harbor design that pairs auto‑enrollment/escalation with mandatory employer contributions and notice rules.

Minimum Defaults and Employer Contributions

Default deferral starts at least 3% and must auto‑escalate annually up to 6% (or more within limits).

Employer must make either a matching or nonelective contribution under QACA rules.

QACA generally exempts plans from ADP/ACP testing if conditions are met.

Communications and Operations

Timely participant notices, accurate payroll set‑ups, and annual monitoring are essential.

Plan Sponsor Action Checklist

Checklist

Confirm QACA default rates/escalation in your plan document.
Checklist

Set a notice calendar and track delivery each year.
Checklist

Audit payroll mappings after any HRIS change.
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References

  • IRS FAQs on QACA safe harbor.