Susan L

Not only charter schools. We're aware of governmental plans that cover employees of public sector unions and employees of associations for cities, counties, etc., which I would consider non-governmental employers. Not sure how the private employers deal with having many of their employees covered by a governmental plan. On the public sector side, the employers pay employer contributions to the governmental plans for these employees, and deduct employee contributions from pay that is paid to the governmental plans. Still trying to understand the issues under the Tax Code for the governmental plans. There seems to be zero tolerance at the IRS for governmental plans covering non-governmental employees, so apparently this has more to do with no IRS enforcement in the public sector than anything else. Good to see these comments.

If the NJ SACT is a qualified plan and the member has not reached the required beginning date (70 1/2), then the after-tax portion could be rolled to the Roth IRA, while the not yet taxed earnings could be rolled to a traditional IRA. From the IRS website: Can I roll over my after-tax contributions to a Roth IRA and the earnings on my after-tax contributions to a traditional IRA? Yes. Earnings associated with after-tax contributions are pretax amounts in your account. Thus, after-tax contributions can be rolled over to a Roth IRA without also including earnings. Under Notice 2014-54, you may roll over pretax amounts in a distribution to a traditional IRA and, in that case, the amounts will not be included in income until distributed from the IRA.

This sounds like a 414(h) governmental pick up plan, which is the only way I am aware of that mandatory employee contributions can be considered pre-tax (https://www.irs.gov/government-entities/federal-state-local-governments/employer-pick-up-contributions-to-benefit-plans ). Like you, I'll be interested to hear if anyone knows of a way to do mandatory employee contributions in a plan that is not a governmental plan.