401K post-tax voluntary contributions
I am a medical professional, age 70 & still working, with a 401K safe-harbor profit-sharing plan. Am I precluded, because of the non-discrimination rules, from making post-tax voluntary contributions if none of the other one or two participants in the plan chooses not to make these contributions in a given year? Also, other than the 100% of my salary rule, are there any other limitations to the amount of voluntary post-tax contributions I can make?
Permalink Submitted by Alan - IRA critic on Sun, 2015-07-19 02:58
The 415c limit of 53k (59k with catch up) applies to total contributions (deferrals, match, after tax, forfeitures if any). That’s the easy part. How safe harbor and after tax contributions affect whatever limited testing is still required is extremely complex, and I cannot help you with that one. The ACP test could still be an issue.
Permalink Submitted by Roger Fine on Sun, 2015-07-19 13:08
If a total distribution of a 401K Roth-Ira deferral account takes place at retirement (age 70) & is rolled into a Roth-IRA after being in the 401K for less than 5 years, are the earnings taxed then or does the 5-year timeclock for it becoming a “qualified” distribution continue on in the Roth-IRA?
Permalink Submitted by Alan - IRA critic on Sun, 2015-07-19 22:02
If the Roth IRA is qualified, then the entire balance of the Roth 401k rollover is immediately qualified as well. If not, then before the Roth IRA is qualified, only the amount of contributions made to the Roth 401k is added to the basis of the Roth IRA. The earnings would be taxable if withdrawn.