in section 408(k), any employee who is permitted to be excluded from participation under section 408(k)(2). (4) Guidance The Secretary shall issue regulations or other guidance to carry out this subsection, including— (A) guidelines for determining the classes or categories of employees to be covered by an automatic IRA arrangement, (B) if an employer excludes employees from the automatic IRA arrangement, guidelines providing that the employer shall specify the classification or categories of employees who are so excluded, and (C) rules to prevent avoidance of the requirements of this section. (d) Automatic IRA arrangement For purposes of this section— (1) In general The term automatic IRA arrangement means an arrangement of an employer (determined without regard to whether the employer is required to maintain the arrangement)— (A) under which a qualifying employee— (i) may elect— (I) to contribute to an individual retirement plan, or to purchase a qualifying retirement bond, by having the employer deposit payroll deduction amounts or make other periodic direct deposits (including electronic payments) to the plan or invest such amounts in such qualifying retirement bonds, or (II) to have such payments paid to the employee directly in cash, (ii) is treated as having made the election under clause (i)(I) in the amount specified in paragraph (5) until the individual specifically elects not to have such contributions or purchases made (or specifically elects to have such contributions or purchases made at a different percentage or in a different amount), and (iii) may elect to modify the manner in which such amounts are invested for such year, (B) which meets the administrative requirements of paragraph (3), including the notice requirement of paragraph (3)(C), and (C) which does not charge unreasonable additional fees solely on the basis that the balance in an automatic IRA is small. (2) Employer’s Option to Obtain Affirmative Elections from Employees Instead of Automatic Enrollment As an alternative to automatic