after tax contributions

[LIBERTYKID]

A 403(b) plan provides for salary deferral, after-tax voluntary, and matching contributions. In a 401(k), the after-tax and match are subject to the ACP test. Are after tax also subject to the ACP in a 403(b)? Since salary deferrals in a 403(b) are not subject to the ACP test, I thought there might be a way to not test the after-tax voluntary.

[Laura Harrington]

You have test the after-tax in ACP.

Treas. Reg. §1.403(b)-5 Nondiscrimination rules.

(a) Nondiscrimination rules for contributions other than section 403(b) elective deferrals--(1) General rule. Under section 403(b)(12)(A)(i), employer contributions and after-tax employee contributions to a section 403(b) plan must satisfy all of the following requirements (the nondiscrimination requirements) in the same manner as a qualified plan under section 401(a):

(i) Section 401(a)(4) (relating to nondiscrimination in contributions and benefits), taking section 401(a)(5) into account.

(ii) Section 401(a)(17) (limiting the amount of compensation that can be taken into account).

(iii) Section 401(m) (relating to matching and after-tax employee contributions).

(iv) Section 410(b) (relating to minimum coverage).

(2) Nonapplication to section 403(b) elective deferrals. The requirements of this paragraph (a) do not apply to section 403(b) elective deferrals.