Voluntary Contributions

[thepensionmaven]

Client currently has 401(k) with 3% SHNE.

No ER profit sharing.

they want to add a provision for voluntary contributions.

this this allowed and would any testing be involved, and what type?

[david rigby]

Does "voluntary contributions" mean "after-tax contributions"?

[Lou S.]

Allowed

ACP testing on the after tax voluntary.

 also subject to 415 limits

[chc93]

1 hour ago, Lou S. said:

Allowed

ACP testing on the after tax voluntary.

 also subject to 415 limits

In our experience, ACP testing is the problem, since almost always, it is only the owner/HCE who wants to do this.

[thepensionmaven]

Yeah, voluntary after tax, so we must do the ACP testing.

Good thing a few of the HCEs will not be contributing!  Just the owners.

I do realize 415.

Thank you.

[chc93]

22 minutes ago, thepensionmaven said:

Yeah, voluntary after tax, so we must do the ACP testing.

Good thing a few of the HCEs will not be contributing!  Just the owners.

I do realize 415.

Thank you.

Just curious... the owners are not HCE's?

[BG5150]

Hopefully, it's the owners AND some NHCE's who will make after-tax contributions...

[chc93]

I think I misread the post... doesn't say that the owners are not HCE's, which was my first impression.  But yes, without sufficient NHCE's contributing, no pass.