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.
Talk to our team
References
- IRS FAQs on QACA safe harbor.