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FAQs - Auto Enrollment - Am I required to contribute to my employee’s retirement account if our plan has an automatic contribution arrangement?

Generally, an employer is not required to contribute in order to use an automatic contribution arrangementA. However, if an employer chooses to have a qualified automatic contribution arrangement (QACA), then the employer does have to make annual contributions and the type and amount of these contributions must be stated in the plan. Under a QACA, an employer must make at least a:

  1. a matching contribution of 100% of an employee’s contribution up to 1% of compensation, and a 50% matching contribution for the employee’s contributions above 1% of compensation and up to 6% of compensation; or

  2. a nonelective contribution of 3% of compensation to all participants, including those who choose not to contribute any amount to the plan.

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Page Last Reviewed or Updated: 19-Aug-2013