less at the time of distribution. (ii) Not treated as discriminatory in favor of highly compensated employees A plan shall not be treated as failing to meet the requirements of section 401(a)(4) solely by reason of applying the exception of clause (i) to the requirements of subparagraph (A). (8) Automatic IRA arrangement (A) In general For purposes of this paragraph, the term automatic IRA arrangement means, with respect to an employer (and trustee or issuer designated by the employer), an arrangement facilitated by the employer which meets the requirements of this paragraph and the contribution, investment, and fee requirements of paragraphs (4), (5), and (6), respectively, and under which an employee— (i) may elect— (I) to have the employer make payroll deduction deposits on behalf of the individual as payroll deduction contributions to an individual retirement account, 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) at the level determined under paragraph (4)(D) until the individual makes an affirmative election not to have such contributions made (or to have such contributions made at a level specified in the affirmative election), and (iii) may elect to modify prospectively the level at which contributions are made and the manner in which such contributions are invested for such year. (B) Administrative requirements (i) Payments The requirements of this paragraph shall not be treated as met with respect to any automatic IRA arrangement unless the employer makes the payments elected or treated as elected under subparagraph (A)(i) on or before the last day of the month following the month in which the compensation otherwise would have been payable to the employee in cash. (ii) Notice of election period The requirements of this paragraph shall not be treated as met with respect to any year unless the employer notifies each employee eligible to participate, within a reasonable period of time before the beginning of such year