Timing of After-Tax Contributions ACP & Annual Additions Testing

[Guest SHP]

Have very few Plans which allow after tax contributions and would appreciate any assistance.

It is my understanding that after tax (voluntary nondeductible) contributions may be made either via payroll withholding or by an employee writing a personal check to the Plan. Furthermore, Plan contributions made within 30 days of the due date of the Employers tax return (+ extensions) may be treated as annual additions for the prior Plan Year.

Is there a deadline for making an after tax contribution for them to be considered as the prior year's contribution for ACP and 415 testing?

A non-HCE would now like to make an after tax contribution for PYE 12/31/2000 to avoid 415 problems in 2001. (10% deferral, 10% after tax, + match and p/s) May he do so and would that help the 2000 ACP test?

PPD Plan Document allows after tax contributins but appears silent re: timing of contributions (except those withheld from pay: administratively reasonable period after withholding ...)

[Guest SeanT]

I've dealt with a plan that allowed voluntary "make-up" contributions after the close of the plan year. The ER limited these contributions to NHCEs only. (On a side note, the ER has since removed this language from the plan doc due to the extra administrative work involved - - something to keep in mind before recommending this to your clients.)

The ER would supply NHCEs with their annual statements (approx. 4-6 wks after plan year-end) and a spreadsheet indicating the amount of "make-up" contributions available. Interested participants could contribute on an after-tax basis up to the maximum allowed (lesser of $30K and 25% of comp) - - provided they did so before the end of Feb. This would allow the ER to count these contributions towards the ACP test and still have time to refund excess aggregate contributions to the HCEs by Mar 15 in the event the plan still failed.