American Taxpayer Relief Act of 2012

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Please refer to our February 26, 2015 blog post for potential legislative developments regarding the ability to convert after-tax contributions to Roth contributions.

Plan sponsors seeking to provide employees with the ability to make after-tax contributions to a 401(k) plan may be interested in adding, along with the common Roth contribution feature, non-Roth after-tax contribution and “in-plan Roth rollover” features to their 401(k) plans.  These additional features would allow plan participants to save up to $53,000 (for 2015 and as reduced by matching and other employer contributions) annually with limited future tax liability.

On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 (“ATRA”) into law.  ATRA, adopted as an alternative to stepping over the “fiscal cliff,” preserves most of the Bush-era tax cuts and reinstates several other lapsed tax provisions. Several provisions of ATRA are of particular interest to employers, employees, and employee benefit administrators, because they offer new options for retirement planning or extend certain existing benefits options. Even more recently, the IRS has issued guidance with respect to certain key aspects of ATRA related to qualified transportation fringe benefits.