mjbais1489

Im on the advisor side. The downsides I see aren't testing related they are process & communication related. Process - this likely wont happen very often, is the payroll team strong enough for the employer to make sure its handled correctly every time it does happen (they will have to be re-explained the rules every time it happens and I wouldn't be surprised if a payroll person told an employee it wasn't possible on accident. ) Communication - You need to let employees know its possible. Any complicating things like this muddies the water more than adds value to most employee conversations IMO. I'm trying to get participation & savings rates up, most times adding another layer of decisions brings confusion and decreases engagement. If a client came to me and said we have an NHCE who wants this, I would add it to make the client & employee happy. I would mention in employee meetings but very quickly and move on so I avoid creating a confusing discussion. I would be on the payroll calls initially and I would tell everyone to call me if any other employee wants to do this. The participant election of after-tax on the recordkeeper site would have to be managed well too.

Hi - I usually can keep all the SEP & SIMPLE rules straight but this one is flummoxing me for some reason. Our client started a SEP in 2023 with one year of service as an eligibility rule. Employee was hired October 2024. In May of 2025 they updated the SEP to 3 years of service before eligible for the plan. If they do a SEP contribution for tax year 2025 is the employee required to receive a SEP contribution because they were hired under the 1 year eligibility? or does the employee fall under the 3 year eligibility?

Okay thanks! We've discussed Roth employer contributions. My question becomes he cannot have a vesting schedule on the Profit Sharing then correct? Hes only been in the business for 2/3 years. If he wants to do his "profit Sharing" as Roth he would need to make the vesting schedule something where he is immediately vested in those dollars which means all his employees would be as well? Thats the downside but as @RatherBeGolfing describes maybe that's less of an impediment for some clients than I assume it is.

I know this board is probably tired of After tax/mega backdoor roth questions....but here I go. I'm an advisor who only does 401k/403b/Cash Balance plan advising. We pride ourselves on our ERISA knowledge and everyone on my team has the QKA at least, but a client has come to us with questions that I wasnt sure of. The TPA was on the call and they are researching but I thought Id ask this group as well. The client is a young business owner (~10 employees)who loves after-tax/MBDR strategies. We have shown him numerous profit sharing plan designs, discussed the issues with after tax contributions for a company his size, etc. His question as we reviewed profit sharing is what if instead of profit sharing he does $35k in after tax contributions to get to $70k. Then can he simply do the $80k in profit sharing were showing due to employees as employer after-tax contributions? Everything I read says after tax is subject to ACP, and the only remedy for after-tax is the owner removing their contributions, but could he instead of that just do very large after tax contributions to his employees like a QMAC remedy? There are a ton questions I have that come out from this - who pays the tax, would this money have to be considered fully vested, etc.