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This is only going to be relevant for a small population of plans. Think about who would take advantage of this, especially now that there are Roth 401(k) contributions: pretty much only those participants who are already maxing out. And usually who is that? The HCEs. Granted, there are some NHCEs who max out. But, for most plans, it will only be a very small portion of the staff (unless you have a professional group with a top paid group...but, again, that will be a small portion of plans). Then what happens when the NCHE(s) leave the company? Are you going to tell teh HCEs they can't make voluntary after tax contributions any more? Passing the ACP test would probably be a difficult endeavor. Does this mean you shouldn't do it? Nope. But just be aware of the demographics of the employer and see if it could fit. It seems like a great idea until you run the numbers through that ACP test...

And to answer your question about safe harbor -- adding this feature means that you lose the ACP safe harbor and must test these contributions combined with any matching contributions.

Plans can allow the contributions posited but as QDROPhile accurately points out, very few do. The reason is that taking advantage of the provisions subjects a plan to extra non-discrimination testing (known as the ACP test) and since most people who wish to take advantage of such a provision end up being part of the class of employees subject to limitations due to the non-discrimination testing a plan will frequently find itself needing to un-do the contributions anyway. Hence, unless: 1) the plan is not subject to ACP testing (because 100% of the employees of the plan sponsor are highly compensated; or, 2) a plan finds itself in the position of welcoming non-highly compensated employees to the ranks of those who take advantage of the provision, the plan will fail the ACP test and have to disgorge the contributions made. A waste of effort, essentially.

Yes, they can "disclaim" their interest. The attorney for the estate should be familiar with the requirements.

"they" = "earnings"

I'm not sure you should describe $60K/year as "low-income".

Sigh. So true.

What do the voluntary contributions have to do with it? After-tax contributions would only reported in Box 14, apparently on an optional basis (not box 12). But I'm with QDRO... Do not redo the W-2 if they are accurate. If a 45 year old contributed $20,000, then the W-2 should say $20,000. His or her CPA would only deduct $18,000 on their 1040 due to the cap. A $2,000 distribution must be processed by April 15th 2017 must be processed. The participant will get a 1099 in January 2018 with a code P indicating the amount is taxable in the prior year. No action is required, because the participant DID pay taxes in 2016 (i.e., because he only deducted $18,000 on his taxes).

I believe if you search on the words "solo" and/or "after-tax" you will find threads about a solo 4k plan and this idea on this board. I know it has been discussed before. I at times get real luck on the searches and find exactly what I want and other times I know it is out there and seem to not find it.

I'm imagining that such a provision might be extremely desirable for some low-income employees. For example, someone who is married and makes $60K / year may have a spouse whose income alone provides living expenses. The person making $60K/year might want to stick every available dollar into an after-tax retirement pool. It's hard to see why any company would discourage that. Back when I did 4k plans I saw this now and then but it is in fact a pretty rare set of facts. But yes now and then you would find someone (typically a wife) whose spouse made great money and the kids were all grown up and the lady got a job because she was bored. So she was putting the 402(g) limit into the plan. It made the ADP test that much easier to pass. Such a person could benefit with this kind of provision. But for this rare fact set very few companies are going to add this complex feature.

It's not that the employer is trying to intentionally discriminate, but more the fact that many NHCEs don't participate at the highest levels possible, while more HCEs do (or at least contribute higher %s because they have more spendable overall income). And that poses an ACP nondiscrimination issue along with refunds, etc. You can advertise all you want to every rank of ees, but you will find the lower ranks just won't participate as much. There really just aren't that many workers at lower levels trying to "stick every available dollar into an after-tax retirement pool" especially now that there are so many private options to do the same thing. Why tie that money up in an employer 401k that has (possible) distribution limits ? This was VERY common in the 1980s/1990s and yes, you have to ACP test (match + aftertax). At the time, I would say only about 1/2 our clients offered the option. And many replaced their aftertax option with Roth when Roth 401k became available because truly it was a better option (if held long enough the earnings aren't taxable where in aftertax moneys they are always taxable) Plus you are adding a whole 'nother source of funds for the employer/recordkeepter to deal with -- possibly with its own set of fees, communication issues, loan/distribution rules, plus tracking and testing. I have to agree that most would find it unviable for the amount of possible participation. I suggest you research backwards to when this was more common prior to the mid to late 1990s. I worked directly on plans back then and did a lot of ADP/ACP testing -- it was required of every plan prior to the Safe Harbor rules. Honestly what you are considering loses the advantage of that -- you are trying to move backwards, which may or may not be a good thing.

I'd restate immediately (even for free - as we do) because: 1) it's easier to use our document; 2) the plan sponsor probably no longer has reliance on the old provider's opinion letter; 3) the plan sponsor may be in breach of contract (pretty much everyone I worked for had a provision in their contract that said you could only use the document (which was copyrighted) only as long as you were a client); and 4) "maintenance" amendments would no longer apply and the plan could potentially get out of compliance.

Oops. 3.5%! Investment house is giving them a breakpoint if they have auto-enroll and a "4%" match. Not sure what that means. For some reason I was thinking QACA and 4%. But I knew there's a .5% at the ens of the QACA match so I added up. It's Friday after a snow day. I'm not firing on all cylinders.

EACAs are seperate from QACAs so yes. But a basic SHM is an enhanced QACA anyway, which would allow you to have two year cliff vesting on the match.

I suppose it might make a difference if the commissions are for a commissioned salesperson, where ALL of their comp is based on commissions, or if it is an occasional thing. I don't think there is a hard and fast rule - just facts and circumstances. But under your description above, if commissions are not excluded under the compensation definition of the AA, then the client has to include them regardless. In other words, if they aren't excluded under the normal definition in the AA, and the Administrative Procedures section says that irregular pay is used for deferral purposes UNLESS the participant makes a special election, and the participant hasn't made such a special election, then the fact that the comp might be "irregular" is immaterial.