do not assume that all money withheld from paychecks goes to pay taxes withheld funds are sometimes used for qacas and other automatic enrollment retirement plans 
opt out plans tend to raise participation rates however they generally start at employee contribution levels that are far too low to satisfy retirement needs unfortunately employees tend not to take any action on their own and continue to underinvest over the long term without educational efforts many may not save enough to cover retirement expenses for example they need to be reminded that a 3 contribution is just a starting point 1some argue that opt out plans tend to lower retirement contributions because employees think low preset values are enough to counter this possibility some employers raise the employee contribution rate by 1 each year however that may not be enough for workers to reach their retirement goals an employer must do one of the following for a qaca 1with a qaca employer contributions can be subject to a two year vesting period firms must give their employees adequate notification about the qaca they must also have the ability to choose a different contribution level or opt out entirely 2qacas also have safe harbor provisions that exempt 401 k plans from nondiscrimination testing requirements for actual deferral percentage adp if additional requirements are met the plan will also be exempt from actual contribution percentage acp testing a qaca may not distribute the required employer contributions due to an employee s financial hardship 1qacas vs eacasthe pension protection act defines two different choices for employers seeking to add an automatic contribution arrangement qacas and eacas in an eligible automatic contribution arrangement eaca the plan s default percentage must be uniformly applied to all employees after providing them with the required notice it may allow employees to withdraw automatic enrollment contributions with earnings by making a withdrawal election 1this election must be no earlier than 30 days or later than 90 days after the employee s first automatic enrollment contribution was withheld unlike a qaca employees are 100 vested in their automatic enrollment contributions with an eaca 1qacas provide employers with safe harbor provisions that exempt them from adp and acp testing requirements under specific circumstances other plans must undergo such testing to ensure they do not discriminate against lower paid employees 1in return employers must make matching contributions as required by the irs and must vest matching and non elective contributions within two years the default deferred contribution for a qaca must also increase annually from at least 3 the first year to at least 6 with a maximum of 15 in any year the maximum was 10 until it was raised to 15 by the secure act of 2019 