Roth election for Employer Contributions

[Tom]

I want to be 100% for this particular client who loves Roth.  I realize the plan could allow for Roth conversion as an option.  But he may prefer to fund his employer contribution as Roth.  I know it accomplishes the same thing but that might feel better to him.  He is a sole proprietor and maximizes deferral and employer at 415.  So I assume he could elect Roth for his safe harbor nonelective and profit sharing.  I know it will be troublesome to have to allow this option for his few employees also.  The plan is not on a record keeping platform so we don't have to worry about any limitation there.  The plan already provides for employee Roth but not the employer Roth of course since that is SECURE 2.0.

Sound ok?  Thanks

Tom

[Lou S.]

You can do it, just know the plan (and that probably means you) will need to do the 1009-Rs for all those who elect.

[RatherBeGolfing]

17 hours ago, Tom said:

I know it accomplishes the same thing but that might feel better to him.

It doesn't accomplish the same thing.  For a Roth conversion, each conversion has its own 5 year clock.  Roth employer contributions have one 5 year clock.  I know a lot of providers do not track the 5 year clock on each conversion, but they should. 

I have several plans who have gone with Roth ER with no issues. 

[Tom]

Oh the 5-year clock - Thank you for that!