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Posted

Our plan provides the option to contribute After-Tax.    We do not require separate enrollment for catchup contributions and have chosen to automatically shift contributions from pretax to Roth once the employee has reached the 402g limit, for the Roth Catchup required employees.  

We have Roth Catchup Required employees who have already reached the 415 limit, plus catchup, using combinations of pretax deferrals and After-Tax contributions.   

Assuming the employee has not exceeded the 402(g) limit in pretax deferrals, do we need to recharacterize the pretax amounts to be Roth?

Example:  Roth Required Catchup employee has contributed $13,000 pretax and $67,000 After-tax.  Are there  Would we need to adjust $8000 to be Roth?

Posted

Probably, but may want to check your plan document to see if it mandates an order of correction.

Also, I assume the after-tax contribution will satisfy ACP testing for the plan or such testing is not necessary because everyone is an HCE.

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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