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One Man 401k/Cash Balance


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I have a one man 401(k) Plan where they are looking to put in a Cash Balance Plan as well.  If the owner makes $165k, the maximim Profit Sharing contribution would be 6%, correct?

So they could do $19,500 in 401(k) + 6% of Comp + $108k into Cash Balance (he's 42-years old)?

Is there anyway to get the contribution to be more than 6% into PS?

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Exactly - so no deduction, but could do VAT up to 415 limit, do an in-plan Roth conversion (plan document needs to have Roth provisions) and then voila, you have your back-door Roth that everyone seems to be clamoring for these days. This is one of the rare instances it works (owner/HCE only plans). And at age 42, I would say there is certainly value for the owner in Roth.

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  • 3 weeks later...

Voluntary AFTER Tax are not deducted. Hence the name after tax. The employee pays tax on them. The employer gets a deduction as they are part of the employee wages.

They are not required to be reported on a W-2, but they can be reported in Box 14 for informational purposes.

 

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10 minutes ago, Lou S. said:

Voluntary AFTER Tax are not deducted. Hence the name after tax. The employee pays tax on them. The employer gets a deduction as they are part of the employee wages.

They are not required to be reported on a W-2, but they can be reported in Box 14 for informational purposes.

 

Great, thanks!!!

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