After-Contributions in a 457(b) Governmental Plan

[oldman63]

A 457(b) governmental plan operates under an AXA plan document.  There is an unusual provision in the AXA base plan document.  

“Mandatory Employee Contributions. Notwithstanding section 4.09(a) above, if the Employer has elected Mandatory Employee Contributions in the Adoption Agreement, such contributions shall automatically be deducted from the Employee’s Compensation at the rate or dollar amount indicated in the Adoption Agreement and shall be treated as an after-tax Employee Contribution. If so indicated such Mandatory Contribution shall be to the Plan and be treated as a contribution that satisfies section 3121(b)(7)(F) of the Code. It is the Employer’s responsibility to determine whether this Plan will meet the requirements to be a social security replacement plan.”

 I have no problem with the Mandatory Employee Contributions, but 457(b) plans cannot accept after-tax contributions, with the exception of Roth contributions.  This plan does permit Roth contributions, but the aforementioned provision is very explicit in its reference to after-tax, not Roth contributions.

 What do you think?

[Luke Bailey]

Since no one else has addressed your question, oldman63, I will take a shot. I think you're right. I don't know what they were thinking, assuming your description is accurate.

[Ian]

Can you point me to guidance that says a 457(b) plan can't accept after-tax contributions?   Thanks.