PUBLIC LAW 109–280—AUG. 17, 2006
120 STAT. 1043
‘‘(4) SATISFACTION OF TOP-HEAVY RULES.—A defined benefit plan and applicable defined contribution plan forming part of an eligible combined plan for any plan year shall be treated as meeting the requirements of section 416 for the plan year. ‘‘(5) AUTOMATIC CONTRIBUTION ARRANGEMENT.—For purposes of this subsection— ‘‘(A) IN GENERAL.—A qualified cash or deferred arrangement shall be treated as an automatic contribution arrangement if the arrangement— ‘‘(i) provides that each employee eligible to participate in the arrangement is treated as having elected to have the employer make elective contributions in an amount equal to 4 percent of the employee’s compensation unless the employee specifically elects not to have such contributions made or to have such contributions made at a different rate, and ‘‘(ii) meets the notice requirements under subparagraph (B). ‘‘(B) NOTICE REQUIREMENTS.— ‘‘(i) IN GENERAL.—The requirements of this subparagraph are met if the requirements of clauses (ii) and (iii) are met. ‘‘(ii) REASONABLE PERIOD TO MAKE ELECTION.—The requirements of this clause are met if each employee to whom subparagraph (A)(i) applies— ‘‘(I) receives a notice explaining the employee’s right under the arrangement to elect not to have elective contributions made on the employee’s behalf or to have the contributions made at a different rate, and ‘‘(II) has a reasonable period of time after receipt of such notice and before the first elective contribution is made to make such election. ‘‘(iii) ANNUAL NOTICE OF RIGHTS AND OBLIGATIONS.—The requirements of this clause are met if each employee eligible to participate in the arrangement is, within a reasonable period before any year, given notice of the employee’s rights and obligations under the arrangement. The requirements of clauses (i) and (ii) of section 401(k)(12)(D) shall be met with respect to the notices described in clauses (ii) and (iii) of this subparagraph. ‘‘(6) COORDINATION WITH OTHER REQUIREMENTS.— ‘‘(A) TREATMENT OF SEPARATE PLANS.—Section 414(k) shall not apply to an eligible combined plan. ‘‘(B) REPORTING.—An eligible combined plan shall be treated as a single plan for purposes of sections 6058 and 6059. ‘‘(7) APPLICABLE DEFINED CONTRIBUTION PLAN.—For purposes of this subsection— ‘‘(A) IN GENERAL.—The term ‘applicable defined contribution plan’ means a defined contribution plan which includes a qualified cash or deferred arrangement. ‘‘(B) QUALIFIED CASH OR DEFERRED ARRANGEMENT.— The term ‘qualified cash or deferred arrangement’ has the meaning given such term by section 401(k)(2).’’.
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