Money Purchase post-tax employee contributions

[Guest Kathleen Toth]

If a money purchase plan permitted some post-tax employee contributions to be made, what should/does happen to those funds when the plan terminates?

[pjkoehler]

As always, you'll want to review the plan document's plan termination provisions. Qualified plans, of course, must accelerate vesting on the employer contributions subaccount, so the entire account balance, including the after tax employee contributions, which would have been automatically 100% vested without regard to the plan termination, normally becomes immediately distributable, subject to the cashout rules.

The after tax contributions form part of the participant's tax basis, so they won't affect the plan's income tax withholding obligation.

[This message has been edited by PJK (edited 04-12-2000).]

[Guest]

They will be distributed in accordance with the terms of the plan just like the other moeny.