after tax contributions

[Guest lskin]

I just read something that stated that after tax contributions (not Roth contributions) are limited to 10% of total compensation. I always thought it was just limited to the 415 limit. Does anyone know anything about this?

[RTK]

I suspect that 10% refers to old nondiscrimination rules for after-tax employee contributions. 401(m) of course now covers nondiscrimination issue.

[Guest lskin]

So are you saying there is no longer a 10% limit?

[Guest lskin]

Now I just heard from someone who states that the after tax contributions (not Roth contributions) to a 401k are subject to the 402(g) limit? Can anyone tell me the real limits for after tax contributions?

[JanetM]

402(g) allows for the pre-tax deferral of income. The after tax amount could be as high as $29,000.

415© allows for annual additions of up to $44,000 in 2006. Person could do $15,000 pretax and $29,000 after tax. That of course means there can't be employer contributions or forfeitures.

The total contributions - employer, employee and forfeitures can't exceed $44,000.

Am thinking the old 10% is from back when you included the employees contributions counted in calculating the maximum deductible amount for the employer.

[Guest Harry O]

lskin-

Where do you keep getting all this bad info?

The IRS hotline? <g>

[RTK]

I might as well finish this off since I have an old research file out. Yes, there is no 10% limit. The old rules I was thinking of were set forth in Rev. Rul. 80-350 holding that total voluntary contributions equal to 10% of compensatino would not disqualify plan, restating similar holdings in prior Rev. Ruls. 59-185 and 69-217. Rev. Rul. 80-350 was declared obsolete in in Rev. Rul. 93-87.