The Internal Revenue Service (IRS) recently released Notice 2009-67, Adding Automatic Enrollment to SIMPLE IRA Plans – Sample Amendment. Notice 2009-67 facilitates automatic enrollment by providing a sample plan amendment that a prototype sponsor of a SIMPLE IRA plan (using a designated financial institution) can use in drafting an amendment to add an automatic contribution arrangement to the SIMPLE IRA plan. The IRS plans to issue a revised Form 5305-SIMPLE, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) — for Use With a Designated Financial Institution, that includes an automatic contribution arrangement.
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The Internal Revenue Service (IRS) recently released Notice 2009-66, Automatic Enrollment in SIMPLE IRAs. Notice 2009-66, in question-and-answer format, provides rules for employers that maintain SIMPLE IRA plans. It confirms that SIMPLE IRAs may do the following:
- Include an automatic contribution arrangement;
- Provide that default salary reduction contributions made under an automatic contribution arrangement are made only for employees who are first eligible under the SIMPLE IRA plan on or after the effective date of the automatic contribution arrangement and who do not make an affirmative election;
- Provide that the percentage of compensation at which default salary reduction contributions under an automatic contribution arrangement are made for an employee increases based on the number of years or portions of years for which default salary reduction contributions have been made for the employee.
Notice 2009-66 also reviews the changes in notice requirements for SIMPLE IRAs that include an automatic contribution arrangement, explains the transfer rights that employees must receive during their 60-day election period, and confirms that if the requirements of the regulations under §404(c)(5) of the Employee Retirement Income Security Act of 1974 (“ERISA”) are met, fiduciary relief will apply with respect to the investment of default salary reduction contributions in default investments.
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The Internal Revenue Service (IRS) recently released Notice 2009-65, Adding Automatic Enrollment to Section 401(k) Plans – Sample Amendments. The Notice contains two sample amendments that allow employers to change existing §401(k) plans as late as the last day of the first plan year beginning after December 31, 2008. For government plans, the amendment may be adopted as late as the last day of the first plan year beginning after December 31, 2010. Plan sponsors are not required to adopt the amendments and may need to tailor the amendments to match provisions of their specific plans.
The first sample amendment can be used to add an automatic contribution arrangement to a §401(k) plan. The second sample amendment can be used to add an automatic contribution arrangement described in §414(w) of the Internal Revenue Code of 1986 (permitting 90-day withdrawals) to a §401(k) plan.
Contact Vision Payroll if you have any further questions on Notice 2009-65.
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