Roth 401(k) Amendments

[PMC]

Any updated word on Roth 401(k) model amendments?

I assume a Plan will be able to treat regular before-tax deferrals and Roth 401(k) contributions differently for some provisions, e.g. in-service distributions, loans. Allow them from one source and not the other. Anyone operating that way pending amendment clarification?

[Guest Pensions in Paradise]

We use the Corbel document and the Roth amendment does allow you to treat before-tax and Roth separately for hardship withdrawals, loans, etc. We are recommending to our clients that they not allow hardships, loans, etc. from the Roth portion.

[Guest Bruce Bonanomi]

I agree with Pensions in Paradise. It is allowable but we also recommend that the client not allow hardships and loans from the Roth portion.

[John Feldt ERPA CPC QPA]

Corbel released a good faith amendment in early December (no IRS model found yet). If you are on their prototype maintenance plan you should have free access to that. If not, there should be a location where that language can be purchased.

The dozen or so of our clients have heeded our advice to not allow loans to be made from the Roth accounts (but to utilize the Roth account when determining the 50% limit - giving the loan as the lesser of A) 50% of all accounts or B) the non-Roth account) or C) $50,000).

However, they have all decided to allow Roth to be made available for hardship and for in-service. We are hoping to see final Roth distribution regs by year-end. So far none have actually taken a hardship or in-service with Roth .

One other item, one of our clients had automatic enrollment, so we added another paragraph to the Corbel Roth amendment to specify that negative elections would be contributed as Pre-tax elections, not Roth.