401k Roth Plan

My company currently has 401k plan and we are going to be adding the 401k Roth contributions starting next year. I am looking into setting up the Roth(after-tax) on the BN15. I am wondering how other companies who have both have set the benefit plan up? Do you use one benefit plan utilizing the pre-tax and after-tax deductions? Do you have separate benefit plans on the BN15, 1-401k (pretax deduction) and 1-401kRoth (after-tax deduction)? If you have two plans, how do you manage the annual limits?

Thanks,

Kristin

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Comments

sriman-shivakoti

Ours are in one plan.

unknown

We have one plan as well.

unknown

Hello! We just added Roth contributions to our plan as of 1/1/18. It does need to be on one 401k plan with your pre-tax and Roth deduction codes listed on the Deduction tab. If you have match, make sure you set up match deduction codes to go with your Roth deduction codes. On the BN18.6, you'll change the calculations section to reflect both types of contributions and put the match limits on the BN19.3. I know our payroll folks did some setup as well but I'm not as familiar with that side of things.

I was also concerned about the limits (still am!). We did quite a bit of testing and it appeared to stop both the pre-tax and Roth contributions when the overall limit was hit. I plan to watch that closely this year, though, to make sure that holds true.

My advice is to do lots of testing to make sure your setup will work. Good luck!

sriman-shivakoti

A PR279 could be a helpful tool when auditing limits for the year. We have it set up as a recurring definition job that runs every week and is distributed to those who care.

Your limits should be fine for your over 50 folks, you will need to make sure you have the BSI overrides set up for all affected tax authorities for both the Roth and Pre-tax Earnings types.

unknown

What amount did you set in BSI as the limit? Was it the Normal limit ($18,500 in 2018) or the Catch-Up limit ($24,500)?

sriman-shivakoti

24,500 for each affected authority, Fed, affected states, etc.

ctwyman

Hi Emily,

Have you encountered any issues with incorrect percentages being withheld? In our testing we are finding that when an employee has both the Roth and 401k with multiple paycodes the percentages are not taking correctly(especially when large bonus payments are made). Would you be willing to share your plan setup? You could run the BN215. My email is kmsherwood@fedins.com.

Thanks!

Kristin

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