suspension after after-tax wdr

[Guest Gunner]

Client has referenced "Anti Manipulation" rule to state that they need to suspend all contributions for six months following an after-tax in-service withdrawal.

I cannot find anything to support this although I have seen plan documents which include A/T suspension following A/T wdr.

Any guidance?

[Guest Therese]

Does the plan match after-tax contributions? If not, what does the employer think is being manipulated?

[Kirk Maldonado]

The manipulation is as follows:

1. Employee makes after-tax contributions for January

2. Employee receives a matching contribution

3. Employee withdraws after-tax contribution in February

4. Employee contributes the same dollars in February

5. Employee receives a second match on the same dollars in February

Thus, an employee could receive an unlimited number of sets of matching contributions by recycling the same dollars.

[david rigby]

Hey Kirk, where can I sign up for that plan?

[Guest Therese]

Kirk - that's what I was thinking of too, but the original post doesn't mention a match.

[Kirk Maldonado]

Therese:

I can't think of any other type of manipulation that could occur.

[RTK]

The IRS addressed this rule in Rev. Ruls. 74-55 and 74-56