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Recharacterization of ACP test failures to after-tax in a 403b plan?

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Is it possible to take an HCE's ACP testing refund and have it recharacterized to an after-tax "bucket" within a 403b plan?  I would imagine the plan would need to issue a 1099R reporting the taxable event for the required distribution amount.  

Thanks so much for your assistance!

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Not currently, but considering adding this provision to accomplish the above, if possible.  I understand that any after-tax contributions have to be considered in the ACP test.  Since this client usually fails the ACP test, I'm wondering if this would be helpful at all.

I am not sure if there's a way to "recharacterize" the ACP refund to be an after-tax contribution or if it would have to be first distributed to the HCE and then have the HCE redeposit it into the plan as an after-tax contribution.  Whether it can be "recharacterized" or if it has to be a 2 step process, would the after-tax contribution be considered in the same testing year as the refund occurred or the year in which it is contributed?

Thank you!



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