Old-school after tax vs. ACP Test

[AlbanyConsultant]

Is there a way to make after tax contributions (not Roth contributions, but the old, "employee voluntary" kind) into a safe harbor for the ACP test?

A broker called with a not-for-profit where the PS allocation is set pretty low. They're down to one active participant now (from 3), so she wants me to add an after tax provision to the plan so the director can put away the max out of her pocket and then roll it to a Roth IRA when she retires after 2009.

At the moment, this sounds OK (based on my limited following of IRA rules), but there are other employees, and I foresee the day when one becomes eligible and doesn't put in any after tax money. Massive ACP failure - I'd have to refund the entire year's contribution for the director.

I don't think the ACP safe harbor applies here because that's for a company match, not voluntary contributions, right? Is there any way this can be considered safe harbor? Otherwise, it's an interesting idea for a very very limited situation that would have to be monitored very very closely.

[PMC]

Is there a way to make after tax contributions (not Roth contributions, but the old, "employee voluntary" kind) into a safe harbor for the ACP test?

A broker called with a not-for-profit where the PS allocation is set pretty low. They're down to one active participant now (from 3), so she wants me to add an after tax provision to the plan so the director can put away the max out of her pocket and then roll it to a Roth IRA when she retires after 2009.

At the moment, this sounds OK (based on my limited following of IRA rules), but there are other employees, and I foresee the day when one becomes eligible and doesn't put in any after tax money. Massive ACP failure - I'd have to refund the entire year's contribution for the director.

I don't think the ACP safe harbor applies here because that's for a company match, not voluntary contributions, right? Is there any way this can be considered safe harbor? Otherwise, it's an interesting idea for a very very limited situation that would have to be monitored very very closely.

[ERISAnut]

There is not way to make after-tax contributions into a qualified plan without the ACP test. There is no safe-harbor. The director can, however, make a non-deductible contribution to a traditional IRA. That's $6,000 for 2008 if she is over age 50.