Employee contributions

[Guest pepe100]

Could someone help me with this?

Of the basic plans, Hybrids Defined Contributions Plans, Government & Exempt Plans, IRA's and Qualified Plans... Is there a rule of thumb of knowing which retirement plan allows employees to contribute?

[david rigby]

Sort of.

- Many DC plans allow EE contributions, but they are usually 401(k)-type deferrals (pre-tax). After-tax contributions are permitted but not very common.

- DB plans rarely permit EE contributions of any type, primarily due to difficult administrative burdens. There is a significant exception in government-sponsored DB plans, since such organizations can generally utilize tax code provisions that allow pre-tax contributions.

[Lori Friedman]

The rule of thumb for qualified plans (i.e. plans governed by I.R.C. Sec. 401(a): pre-tax elective deferral contributions must be made through a 401(k) provision. A profit sharing plan or ESOP with a 401(k) provision, or a SIMPLE 401(k) plan, can receive pre-tax employee money. Other qualified plans can certainly receive employee contributions, but only on an after-tax basis.