after-tax employee contributions

[alexa]

We limit HCE's to 10% 401(k) pre-tax employee contributions in 1 of our collectively bargained plans to pass 401(k) testing. We do not currently match

We are thinking about adding an after-tax feature to our plan due to HCE participants inquiring.

Can we allow a 15% after -tax ? Are there any restrictions/limits on after-tax other than making sure we don't exceed 415 limits which now have been raised to 100% of compensation?

I do understand that we will have more administration as a result of adding this feature.

Can you point me to cite if any restrictions

[Mike Preston]

After-tax contributions are aggregated with matching contributions and must satisfy the ACP test. Hence, what you are proposing will likely not work.

In typing the above, I totally missed the part about it being a collectively bargained plan. Yes, the ACP tests do not apply to collectively bargained plans, while the ADP test does apply even though 410(B) and 401(a)(4) do not.

[alexa]

The plan covers only collectively bargainned so no ACP testing required

[Mike Preston]

As long as both the HCE's and the NHCE's have the same availability with respect to the making of after-tax contributions, I don't see any restrictions other than the 100% of pay 415 % limit actually applying. I suppose there might be an isolated case where somebody who makes more than $160,000 wants to make an after-tax contribution which would exceed the dollar limit, but on a practical level, that isn't likely to happen. So, other than slightly modifying your original statement to say that both the 100% percent of pay limit and the $40,000 dollar limit apply to the elections made under the plan I'm not aware of any other limitations.