mandatory Employee contributions: after-tax?

[Guest Fred Maynard]

Are mandatory employee contributions to a defined benefit plan always considered after-tax contributions?

Thanks to one and all.

[JAY21]

I'm pretty sure they are always after-tax contributions if it's a plan sponsored by a private company (vs. government entity). However, some State/Political subdivision entities that "pick up" required employee contributions can treat them as employer contributions so they are not taxed to the employee. See IRC 414(h)(2). I believe several State pension plans fall into this category.

[Lori Friedman]

Fred, in a word, yes, for nongovernmental sponsors.

There are very limited opportunities for pre-tax employee contributions to Sec. 401(a) plans (qualified plans). The plan must have a 401(k) provision, something that can't be offered by most qualified plans. A DBP can't have a 401(k) provision. It doesn't matter whether the employee contributions to a DBP are voluntary or mandatory, they're made on an after-tax basis.