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Why do some companies not allow or limit after tax 401k contributions?
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Topic: Why do some companies not allow or limit after tax 401k contributions? (Read 1780 times)
tetlee
5 O'Clock Shadow
Posts: 42
Location: Tempe, AZ
Why do some companies not allow or limit after tax 401k contributions?
«
on:
March 30, 2016, 10:46:27 AM »
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
»
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Vanguards and Lentils
Bristles
Posts: 288
Age: 33
Re: Why do some companies not allow or limit after tax 401k contributions?
«
Reply #1 on:
March 30, 2016, 11:03:38 AM »
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
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tetlee
5 O'Clock Shadow
Posts: 42
Location: Tempe, AZ
Re: Why do some companies not allow or limit after tax 401k contributions?
«
Reply #2 on:
March 30, 2016, 11:29:32 AM »
Interesting, thanks!
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Proud Foot
Handlebar Stache
Posts: 1160
Re: Why do some companies not allow or limit after tax 401k contributions?
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Reply #3 on:
March 30, 2016, 01:37:22 PM »
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.
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Why do some companies not allow or limit after tax 401k contributions?