Tax Facts

3753 / What special qualification requirements apply to 401(k) plans?



To qualify, a 401(k) plan (or a plan that provides a 401(k) cash or deferred arrangement) generally must first be a qualified profit sharing or stock bonus plan.1

Contributions to the plan made under a cash or deferred arrangement must satisfy the nondiscrimination in amount requirement ( Q 3802), be subject to withdrawal restrictions
( Q 3802), and will not be included in the employee’s gross income unless the employee elects to treat the contributions as designated Roth contributions ( Q 3779).





1.  IRC § 401(k); Treas. Reg. § 1.401(k)-1(a)(1).


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