401(k) Post Tax Contributions

[Guest amm19]

I have a plan sponsor that has asked whether or not it is permissible to allow for post tax contributions under his qualified retirement plan. The plan is a 401(k) with employee and match contributions. The document allows for post tax contributions. The custodian will accept these contributions as a money source. I am unfamiliar with the non-discrimination testing as it pertains to the post tax contributions. Coud somebody please highlight for me those tests that are required and possibly point me to a good resource?

Thanks in Advance...

[david rigby]

Yes, after-tax contributions are permissible. However, they are subject to some non-discrimination testing. You might need to submit additional specs to determine whether such contributions are likely to have a problem with the non-discrmination test. For example, if only highly-paid employees are likely to make such contribution, that can lead to a problem. Also, what level of employer matching contribution already exits?

Some earlier discussion threads may be of value:

http://benefitslink.com/boards/index.php?showtopic=10776

http://benefitslink.com/boards/index.php?showtopic=14631