BenefitsLink logo
EmployeeBenefitsJobs logo
Free Daily News and Jobs

“BenefitsLink continues to be the most valuable resource we have at the firm.”
-- An attorney subscriber
Featured Jobs

Senior Retirement Plan Administrator (Marlton NJ)

Retirement Plan Administrator (Farmington MI / Telecommute)

Employee Benefits Attorney (Indianapolis IN)
Defined Contribution Administrator (Oak Brook IL)
Plan Administrator (Huntington Beach CA / Ballston Lake NY)
Associate Fund Counsel (Washington DC)
Search all jobs
 
Get the BenefitsLink app LinkedIn
Twitter
Facebook
Jump to content
BenefitsLink Message Boards
Santo Gold

after-tax employee contributions

Recommended Posts

If an employer wants to allow for after-tax employee contributions, then those contributions are tested in the ACP test.  If the plan operates as a safe harbor match, does that mean that ACP test passes the inclusive of the after-tax employee contributions?

Thanks

Share this post


Link to post
Share on other sites

You can do the ACP test either on just the after-tax employee contributions, or on the after-tax contributions plus the match.

Share this post


Link to post
Share on other sites

 the plan must pass ACP if they are making voluntary after-tax contributions- having a Safe Harbor Match does not automatically satisfy the ACP if you are making After-Tax

Share this post


Link to post
Share on other sites

What would this do to top heavy requirements?

As an example, a safe harbor plan with 5 participants composed of 3 owners and 2 employees, all of which are HCEs.  The owners and 1 employee defer to get full company match of 4%, but 1 employee defers nothing, gets no company match.  If the plan was amended to allow after tax 401k contributions and this feature was used, I understand it would still pass ADP/ACP (because there are no NHCEs), but would lose its TH protections.  Would there be a mandatory 3% TH employer contribution to the non-deferring HCE?

Share this post


Link to post
Share on other sites
1 hour ago, stxman said:

… 5 participants composed of 3 owners and 2 employees, all of which are HCEs. 

Don't you first have to determine Key vs. Non-Key?

Share this post


Link to post
Share on other sites
Just now, david rigby said:

Don't you first have to determine Key vs. Non-Key?

Sorry for not making that explicit.  Each owner is 1/3 equity holder, so key.  The 2 employees have zero equity, aren't officers, etc so I am assuming they are both non-key.

That said, if the TH minimum must be met for the 1 non-participating, non-key employee, could a profit share contribution be used to cover that?

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×
  • Create New...