After tax DCP 415c maximum question

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Topic Author
Gleevec
Posts: 346
Joined: Sun Mar 03, 2013 10:25 am

After tax DCP 415c maximum question

Post by Gleevec »

Hi,
I’m a public university employee with 401a, 403b, 457.

1) Does unrelated 1099 consulting that is results in me doing an employer contribution to my solo 401k aggregate towards 415c limit?

2) I am confused by existing threads on if my mega backdoor Roth IRA limit (I don’t own 50% university, of course) is $56k-pretax 401a contribution OR $56k-403b OR $56k-401a-403b?

Thanks
Spirit Rider
Posts: 13977
Joined: Fri Mar 02, 2007 1:39 pm

Re: After tax DCP 415c maximum question

Post by Spirit Rider »

The 402g employee elective contribution limit 2018/19 = $18.5K/$19K applies to all 401k, 403b, SARSEP and SIMPLE IRA plans combined. In your case 403b + your one-participant 401k.

The 415c employee + employer annual addition limit applies separately to each unaffiliated employer. A 403b is considered controlled both by the 403b employer and a 403b participant with > 50% businesses ownership. In your 1099 business not the 403b employer

Therefore, for 415c purposes the public university's 401a + 403b (same employer) and the public university's 403b + your one-participant 401k (under same control) must separately be aggregated. Your employee after-tax contributions are limited to the specific aggregation(s) involved.

The 457b contribution limit is equal to, but not subject to the 402g limit and not subject to the 415c annual addition limit
Topic Author
Gleevec
Posts: 346
Joined: Sun Mar 03, 2013 10:25 am

Re: After tax DCP 415c maximum question

Post by Gleevec »

Very grateful and impressed, thank you and happy new year!
ofckrupke
Posts: 974
Joined: Mon Jan 10, 2011 1:26 pm

Re: After tax DCP 415c maximum question

Post by ofckrupke »

Spirit Rider wrote: Tue Jan 01, 2019 7:48 pm Therefore, for 415c purposes the public university's 401a + 403b (same employer) and the public university's 403b + your one-participant 401k (under same control) must separately be aggregated. Your employee after-tax contributions are limited to the specific aggregation(s) involved.
I'm sorry but I have just re-read 26 CFR 1.415(f)-1(f)(2) and I am not seeing application to the specific underlined statement, even in the case where there is an employee-controlled employer with a DCP. The special treatment of the 403(b) annuity contract as a defined contribution plan for 415c aggregation seems clearly to be limited in scope, in the text, to aggregation with the DCP(s) of the 50+%/controlled entity. That is, the notion that [a 403(b) is maintained by both employer and employee] is restricted to the 50+%-owned employer...and therefore doesn't require the 403(b) to be treated as a DCP for separate aggregation with other DCPs of the non-controlled employer sponsoring the 403(b).

in 26 CFR 1.415(f)-1(f)(2)(i), the effect of the sentence:
In addition, in such a case, the section 403(b) annuity contract is aggregated with all other defined contribution plans maintained by the employee or any other employer that is controlled by the employee.
seems to be to make clear that where there are multiple controlled employers, contributions to any 403(b)s must be aggregated with the DCPs of all controlled employers in a single aggregation....but nothing related to de facto treatment of a 403(b) as a DCP for aggregation with other DCP(s) of a noncontrolled employer.

Apparently we interpret some key word or words in the code differently; but what are they?
Topic Author
Gleevec
Posts: 346
Joined: Sun Mar 03, 2013 10:25 am

Re: After tax DCP 415c maximum question

Post by Gleevec »

ofckrupke wrote: Tue Jan 01, 2019 8:45 pm
Spirit Rider wrote: Tue Jan 01, 2019 7:48 pm Therefore, for 415c purposes the public university's 401a + 403b (same employer) and the public university's 403b + your one-participant 401k (under same control) must separately be aggregated. Your employee after-tax contributions are limited to the specific aggregation(s) involved.
I'm sorry but I have just re-read 26 CFR 1.415(f)-1(f)(2) and I am not seeing application to the specific underlined statement, even in the case where there is an employee-controlled employer with a DCP. The special treatment of the 403(b) annuity contract as a defined contribution plan for 415c aggregation seems clearly to be limited in scope, in the text, to aggregation with the DCP(s) of the 50+%/controlled entity. That is, the notion that [a 403(b) is maintained by both employer and employee] is restricted to the 50+%-owned employer...and therefore doesn't require the 403(b) to be treated as a DCP for separate aggregation with other DCPs of the non-controlled employer sponsoring the 403(b).


in 26 CFR 1.415(f)-1(f)(2)(i), the effect of the sentence:
In addition, in such a case, the section 403(b) annuity contract is aggregated with all other defined contribution plans maintained by the employee or any other employer that is controlled by the employee.
seems to be to make clear that where there are multiple controlled employers, contributions to any 403(b)s must be aggregated with the DCPs of all controlled employers in a single aggregation....but nothing related to de facto treatment of a 403(b) as a DCP for aggregation with other DCP(s) of a noncontrolled employer.

Apparently we interpret some key word or words in the code differently; but what are they?
Hi,
Are you saying that after tax DCP Max is $56k for employees (<50% ownership) since 401a/403b not aggregated? I had previously thought $56k-pretax401–403b was mega backdoor Roth Max?
Topic Author
Gleevec
Posts: 346
Joined: Sun Mar 03, 2013 10:25 am

Re: After tax DCP 415c maximum question

Post by Gleevec »

Spirit Rider wrote: Tue Jan 01, 2019 7:48 pm The 402g employee elective contribution limit 2018/19 = $18.5K/$19K applies to all 401k, 403b, SARSEP and SIMPLE IRA plans combined. In your case 403b + your one-participant 401k.

The 415c employee + employer annual addition limit applies separately to each unaffiliated employer. A 403b is considered controlled both by the 403b employer and a 403b participant with > 50% businesses ownership. In your 1099 business not the 403b employer

Therefore, for 415c purposes the public university's 401a + 403b (same employer) and the public university's 403b + your one-participant 401k (under same control) must separately be aggregated. Your employee after-tax contributions are limited to the specific aggregation(s) involved.

The 457b contribution limit is equal to, but not subject to the 402g limit and not subject to the 415c annual addition limit
Sorry if Im confused, but if <50% business ownership, are you saying only the 401a counts against 415c limit. Meaning the max for a mega backdoor roth here is $56k-pretax401a?
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