If a plan satisfies the ADP contribution requirements, does it also satisfy the QACA?

Meeting the ADP (Actual Deferral Percentage) contribution requirements does indeed satisfy the QACA (Qualified Automatic Contribution Arrangement) requirements. This is because a QACA is designed to encourage higher participation rates and contributions among employees, particularly those who might otherwise opt out of participation.

When a plan meets the ADP requirements, it ensures that the average deferral percentages for highly compensated employees do not exceed certain thresholds compared to non-highly compensated employees. This is crucial in maintaining compliance with nondiscrimination rules that protect lower-paid employees.

Since QACAs incorporate automatic enrollment features and often default contribution rates that align closely with what is encouraged by ADP compliance, achieving ADP compliance effectively means the plan also adheres to the necessary elements of a QACA. Thus, if the plan satisfies ADP contribution requirements, it is inherently satisfying QACA requirements as well, without any additional need for qualification measures.

The other choices represent scenarios that do not apply in this context. The independence of the two requirements (as suggested by the first option) does not accurately reflect the interconnectedness of compliance under the QACA regulations, which build on stimulating a balanced participation rate. The notion that it may depend on the type of plan or that it satisfies only partially does not