After-tax Contributions / Reasonale Limits

[austin3515]

I have a participant in the plan for whom we added after-tax contributions.  Not to worry, she is not an HCE.  She is married to a guy who is an "HCE" but he works for an unlreated company. But the bottom line is she wants to contribute as much as possilbe.

What sorts of limit are people imposing on these contributions to make sure we don't blow the 415 limit? Can it be a one-off limit decided at the beginning of the year?  For example, I want the client to be able to add a goal to the payroll system.

I think it just occured to me that the payroll system's "goal" should be $58,000 minus 19,500 ASSUMING the Employer contributions will not exceed the Employer contributions (in my case they will not).

Is that what people are doing? Other idea?

[C. B. Zeller]

I've never come across this situation in person, but I what I would probably do would be to just tell the participant that the maximum they can put into the plan between their 401(k) and voluntary contributions is $58,000, and if they go over that, they are going to have problems. Let them figure out how many pay periods are left in the year and how much they can contribute out of each paycheck and to what source.

[austin3515]

Well the sponsor has problems too...  More work all around if the limit is blown.

[C. B. Zeller]

Most payroll systems can track the 402(g) limit, even between pre-tax and Roth, so I don't see how this would be much different conceptually. Of course, what payroll providers' systems should conceptually be capable of and what they are in fact capable of are rarely the same thing.

[austin3515]

3 minutes ago, C. B. Zeller said:

Of course, what payroll providers' systems should conceptually be capable of and what they are in fact capable of are rarely the same thing

They certaonly would not be able to apply an aggregate 415 limit, but we should be able to use their goal functionality.  i think I've cracked the code in terms of setting up an appropriate goal.

[Gilmore]

Her husband is an HCE of the unrelated company, or the company she works for?

[BG5150]

If you make decide to make the limit at BOY won't you have to amend the plan every year?

Or will it be sufficient to codify in the document the after-tax limit is the applicable year's 415 max minus max deferrals under 402(g)?

But what happens if the plan becomes Top Heavy?  Or there is a situation where a QNEC is necessary?  Or the ER wants to make a contribution?