Roth catchup and a pooled plan

[AlbanyConsultant]

Yuck.

The plan is a pooled 401k (yes, they still exist!) and now the owner needs do to Roth catchup deferrals.  I really don't want to commingle the pre-tax and Roth in the same account.

Is there a discrimination issue if only the HCE HPI has a self-directed account?

I have been suggesting that they move to a participant-directed model for years and I was hoping that this would be the thing that clinched the decision... but the owner says that he's retiring in 2-3 years and doesn't want to go through all the changes for a short term, so I'm looking for a different solution.  Part of me hopes there isn't one...

Any other suggestions (other than "you can't always get what you want, even if you are a doctor")?

[WCC]

possibly a second "pooled" account invested the same was as the pre-tax pool? 

[jsample]

My pooled 401k plans are run on a recordkeeping system, ASC.  I have multiple sources, including Roth, while using one pooled investment trust.  The recordkeeping system tracks the sources, contributions, and earnings.  

[Bri]

3 minutes ago, jsample said:

My pooled 401k plans are run on a recordkeeping system, ASC.  I have multiple sources, including Roth, while using one pooled investment trust.  The recordkeeping system tracks the sources, contributions, and earnings.  

Yeah, I'm not sure you need to separate the funds, since you should be separating the recordkeeping behind the scenes.  The gains on the Roth are computed the same way as they are on pre-tax accounts in a pooled setting.

[Lucky32]

It sure sounds like the HCE HPI would have an advantage being the only participant with an SDA.

[Paul I]

You must have an accounting process that tracks individuals' accounts for different type of contributions.  This individual's Roth Catch-up is just one more account type to add to your collection of types of contributions.  If this causes a problem with having to alter programs or even spreadsheets, then create an account for a participant named "Owner Roth" and, if needed, the owner's account number/ssn with one digit added or changed.

[Peter Gulia]

A Treasury rule includes this:

Q-13 Does a transaction or accounting methodology involving an employee’s designated Roth account and any other accounts under the plan or plans of an employer that has the effect of transferring value from the other accounts into the designated Roth account violate the separate accounting requirement of section 402A?

A-13.

(a) Yes. Any transaction or accounting methodology involving an employee’s designated Roth account and any other accounts under the plan or plans of an employer that has the effect of directly or indirectly transferring value from another account into the designated Roth account violates the separate[-]accounting requirement under section 402A. However, any transaction that merely exchanges investments between accounts at fair market value will not violate the separate[-]accounting requirement.

26 C.F.R. § 1.402A-1 https://www.ecfr.gov/current/title-26/section-1.402A-1.