Plan doc allows for provisions, but no service provider offers it

If a plan doc allows for certain provisions (for example, voluntary after-tax contributions) but none of the service providers include that in their offering, what right do participants have to demand it?

Thank you!

15 hours ago, Bill Presson said:

The participants have the right if it's in the document. The document either needs to be amended to remove the option or the employer needs to find new service providers.

True, participants have a right to demand it - but let's be clear here - the right can *only* be enforced against the plan fiduciaries - not the service provider.  Service providers can define their offering as they see fit - and it's up to the fiduciaries to determine if that is appropriate.

When we take on a new client, we restate them onto our document - and ensure that it contains only those provisions that we can handle.

BTW, I know it is only an example, but any service provider that can't handle voluntary after tax contributions won't be in business long....

Where did the document come from and who are all the service providers "none" of which can support the specific provision (which means a serious disconnect between those functions)? 

If it is a provision in a plan document and has been communicated to participants (SPD) but you are not offering it because your service provider(s) cannot support then I agree with MoJo that there is a fiduciary issue.

On the other hand, if it is an available document provision (an adoption agreement option) for your document version but which has not actually been selected because your service provider(s) will not support, then that is not an issue between the employer and plan participants. It is a concern as MoJo stated as to the quality of the service provider(s).

The plan sponsor is concerned about passing testing if they allow the voluntary after-tax contributions (this is not a Safe Harbor plan). Do most plans usually successfully offer voluntary after-tax contributions? And if so, is there anything they should be aware of to help it pass testing? Any other provisions they should ensure are added?

My only experience is a larger plan (50 HCE's, 250 NHCE's) and only 1 to 2 HCE's (large after-tax), and 3 to 4 NHCE's (small-moderate after-tax) have after-tax, and the ACP test barely passes.  I keep warning them, but one HCE demands this and the plan is accommodating him.  I'm not sure how a small plan would pass testing, since usually it's only the HCE's who want to do after-tax. Maybe the best scenario is to fail and refund the after-tax (it's not the end of the world).  After enough of of this, the HCE's may get the hint.  Or very large employer match to the NHCE's.

20 hours ago, 401kay said:

he plan sponsor is concerned about passing testing if they allow the voluntary after-tax contributions (this is not a Safe Harbor plan).

Has nothing to do with Safe Harbor or not.  The voluntary after-tax (VAT )will be in the ACP test regardless.

Like chc93 said, I've only seen it work in large plans, and then, only if there are a bunch of well-paid NHCE who are near the HCE comp limit, or in plans that have a ton of HCE but a bunch are NCHE b/c they use the top paid group.

These days, I usually only see it in a owner only plan where the ACP test does not apply since there are no NHCE.

The VAT used to be a great way to get more money into a retirement plan, especially when the limits were so low, like under $10,000.

Now, with higher amounts allowed, and with the allowance of Roth Deferrals, participants and sponsors alike are bypassing the VAT.

On 8/26/2022 at 4:24 PM, BG5150 said:

... participants and sponsors alike are bypassing the VAT.

My experience is the opposite, perhaps because I tend to work with larger employers than many of the regulars on these message boards.  During the past ten years or so, the rules regarding rollovers and in-plan Roth conversions have increased, not decreased, interest in accepting voluntary employee after-tax contributions.