After Tax Contribution to Company’s 401k Plan
Receiving conflicting information about the latest date a participant can make an After-Tax Contribution to the Company’s 401k Plan for the prior year.
There is very little detailed IRS guidance on employee after-tax contributions.
Therefore, this will be controlled by the 401k plan document and plan procedures.
As is commonly done, in the absence of explicit guidance, plans will use inference of the closest tax code, IRS regulations and guidance.
In all plans I am familiar, the same rules apply to employee after-tax contributions as employee deferrals.
Such contributions must be deducted from compensation with “pay date” on or before 12/31 of the year the contribution is for.
That is not our understanding. Checks can be written for the appropriate amount and deposited into the account along with informing the plan administrator, after the end of the calendar year. With all the recent changes, just need to know the new deadline.
It only matters what the plan document specifically states and plan rules and procedures allow.
There is no tax code provision or IRS guidance that mandates what you are suggesting.
If a plan document does not provide for direct payments and plan rules and procedures does not provide a method to do so it can not be done.
It is a serious 401k plan error for a plan administrator to be in violation of the plan’s document, rules and procedures.
Any questions about this should be directed to the plan’s administrator.
Permalink Submitted by Rick Sunchez on Mon, 2021-06-28 03:30
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