Testing using comp ;ess deferrals

[Richard Anderson]

When testing using compensation less deferrals, are 401(k) ROTH deferrals

excluded from compensation?

I would think they would be included in compensation since they are post-tax deferrals.

[ETA Consulting LLC]

When testing using compensation less deferrals, are 401(k) ROTH deferrals

excluded from compensation?

I would think they would be included in compensation since they are post-tax deferrals.

I think the reference has always been Compensation less pre-tax deferrals; even prior to the Roth rules.

Good Luck!

[Tom Poje]

if you were to allocate a profit sharing contribution on comp less deferrals would you follow the same logic? If the HCEs are the only ones who make Roth they would come out ahead, and I don't think that would be the intent of the law.

while I haven't ever seen the issue addressed. I don't believe the 414s regs were ever modified since Roth contributions were permitted, but that may be more of an oversight)

but I would think excluding deferrals of only those who make pre tax deferrals would fail a consistency requirement.

[ETA Consulting LLC]

but I would think excluding deferrals of only those who make pre tax deferrals would fail a consistency requirement.

'Consistency'???

[Kevin C]

The EOB points out that the 414(s) regulations pre-date Roth deferrals and says that presumably deferrals would be treated the same regardless of whether they are regular or Roth. It also says that a literal interpretation of the regs would lead to the interpretation that you could exclude regular deferrals and count Roth. It ends by saying that the IRS will probably at some point clarify that different treatment is not intended.