Though quickly converting non-Roth after-tax contributions
into a Roth can minimize taxable earnings, it is still possible that some additional tax liability may result if the account has generated earnings between contribution and conversion.
69-277 provides that a pension plan may permit distribution of the employee's after-tax contributions
before employment termination.
In general, the 401(k) funds will be eligible if they are employer-matching and profit-sharing contributions, employee after-tax contributions
to a traditional 401(k), or pre-tax employee and Roth contributions once the client reaches age 591/2.
The plan did not permit after-tax contributions
or other additions that would not be included in gross income if distributed to the employee.
If the plan allows for after-tax contributions
, those contributions will be subject to the general ACP testing requirements, whether or not the plan is otherwise treated as meeting the safe harbor for matching contributions.
Any such repayments are treated as after-tax contributions
for tax purposes, not treated as after-tax contributions
for other purposes, such as actual contribution percentage testing under Sec.
The law firm's health plan involved stop-loss insurance and required after-tax contributions
USERRA specifically gives a reemployed veteran the opportunity to make after-tax contributions
and elective contributions for periods of military service, over a period of at least three times the length of the absence, not to exceed five years.
This release leaves unclear the treatment of welfare plans in which employee after-tax contributions
are accepted and sent to a third-party administrator in an administrative-services-only (ASO) situation, and self-funded plans in which the benefit payments always exceed the after-tax employee contributions.