Page:United States Statutes at Large Volume 120.djvu/1068

 PUBLIC LAW 109–280—AUG. 17, 2006

120 STAT. 1037

is equal to the amount of elective contributions made with respect to the first payroll period to which the eligible automatic contribution arrangement applies to the employee and any succeeding payroll period beginning before the effective date of the election (and earnings attributable thereto). ‘‘(3) ELIGIBLE AUTOMATIC CONTRIBUTION ARRANGEMENT.— For purposes of this subsection, the term ‘eligible automatic contribution arrangement’ means an arrangement under an applicable employer plan— ‘‘(A) under which a participant may elect to have the employer make payments as contributions under the plan on behalf of the participant, or to the participant directly in cash, ‘‘(B) under which the participant is treated as having elected to have the employer make such contributions in an amount equal to a uniform percentage of compensation provided under the plan until the participant specifically elects not to have such contributions made (or specifically elects to have such contributions made at a different percentage), ‘‘(C) under which, in the absence of an investment election by the participant, contributions described in subparagraph (B) are invested in accordance with regulations prescribed by the Secretary of Labor under section 404(c)(5) of the Employee Retirement Income Security Act of 1974, and ‘‘(D) which meets the requirements of paragraph (4). ‘‘(4) NOTICE REQUIREMENTS.— ‘‘(A) IN GENERAL.—The administrator of a plan containing an arrangement described in paragraph (3) shall, within a reasonable period before each plan year, give to each employee to whom an arrangement described in paragraph (3) applies for such plan year notice of the employee’s rights and obligations under the arrangement which— ‘‘(i) is sufficiently accurate and comprehensive to apprise the employee of such rights and obligations, and ‘‘(ii) is written in a manner calculated to be understood by the average employee to whom the arrangement applies. ‘‘(B) TIME AND FORM OF NOTICE.—A notice shall not be treated as meeting the requirements of subparagraph (A) with respect to an employee unless— ‘‘(i) the notice includes an explanation of the employee’s right under the arrangement to elect not to have elective contributions made on the employee’s behalf (or to elect to have such contributions made at a different percentage), ‘‘(ii) the employee has a reasonable period of time after receipt of the notice described in clause (i) and before the first elective contribution is made to make such election, and ‘‘(iii) the notice explains how contributions made under the arrangement will be invested in the absence of any investment election by the employee.

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