Compliance August 21, 2013

IRS Explains Automatic Contribution Increase Options

August 21, 2013 (PLANSPONSOR.com) – The Internal Revenue Service (IRS) has updated a web page explaining retirement plan sponsors’ options for automatically increasing participants’ deferrals.
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A plan can automatically increase salary deferral contributions for participants if it has or adopts an automatic contribution arrangement (auto enrollment) feature. Plan sponsors have flexibility over when employees’ contributions will automatically increase and by how much, depending on the plan’s type of automatic contribution arrangement.

Rules differ for basic automatic contribution arrangements, eligible automatic contribution arrangements (EACAs) and qualified automatic contribution arrangements (QACAs). By meeting all QACA requirements, a plan is exempted from the annual actual deferral percentage and actual contribution percentage nondiscrimination testing requirements.

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The web page includes a link to Notice 2009-65, which contains two sample amendments for adding a basic automatic contribution arrangement with automatic contribution increases or an eligible automatic contribution arrangement with automatic increases.

The web page is at http://www.irs.gov/Retirement-Plans/Automatic-Contribution-Increases.

Benefits August 20, 2013

Most Would Still Work After Winning Lottery

August 20, 2013 (PLANSPONSOR.com) – Most Americans would continue to work, even if they won the lottery, a poll by Gallup indicates.
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Two-thirds of American workers polled said they would continue working even if they won $10 million in the lottery, while only 31% said they would stop working. This desire to keep working after enjoying a financial windfall is higher today than in three earlier Gallup measures, all prior to the 2008 to 2009 recession. In each of the three previous times Gallup asked this lottery question, the percentage saying they would quit after winning $10 million ranged from 39% to 44%.

Most American workers who predict they would continue working even after winning the lottery reported they would want to stay at the same job rather than seek a new job. The roughly 2-to-1 ratio in favor of keeping the same job versus getting a new one is about the same as in 2004, but slightly higher than in 2005 and 1997.

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Workers ages 55 and older are much more likely than young workers to say they would quit if they won a $10 million lottery prize. Additionally, older workers who would keep working are much more likely to say they would continue in their current job rather than seek a new job, while those who are younger are more divided. In short, the choice for the large majority of older workers who win the lottery would be to either maintain the same job or quit altogether, while the choice among younger workers would be much more focused on keeping the same job or taking a different job.

The poll found relatively little variation in desire to quit working across educational categories. However, those with postgraduate education or with a high school diploma or less are the most likely to want to stay in their current job, while the middle education groups—college graduates and those with some college—are more likely on a relative basis to say they would continue working, but in a different job.

The poll seems to show that most American workers find work rewarding enough, either financially or in other ways, to compel them to continue working after a hypothetical lottery win. More feel this way today than did so when Gallup asked this question from 1997 through 2005.

These poll results are based on telephone interviews conducted August 7 to 11, with a random sample of 1,039 adults who are employed full or part time, ages 18 and older, living in all 50 U.S. states and the District of Columbia.

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