Author Topic: Why do some companies not allow or limit after tax 401k contributions?  (Read 1453 times)

tetlee

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My company doesn't allow them and my wife is limited to 6%

Wondering if anyone know why it matters to the company?
« Last Edit: March 30, 2016, 10:51:20 AM by tetlee »

Vanguards and Lentils

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The IRS thinks a company is "discriminating" against lower-income folks if the lower-compensated employees contribute, on average, a smaller percentage to their 401(k)s as the highly-compensated employees.

https://en.wikipedia.org/wiki/401(k)#Highly_compensated_employees_.28HCE.29

tetlee

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Interesting, thanks!

Proud Foot

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In addition to what supermatthew said, I would guess that after tax 401k contributions are not permitted because it would "increase cost" due to additional record keeping requirements.