Roth 401k discrimination testing

[nawabe]

My employer has refused to offer the Roth 401k because of the anti-discrimination provisions to the plan. Would someone please explain how the anti discrimination rules affect Roth 401k when the employer contributes nothing.

[roth401k]

The anti-discrimination rules do not apply to the Roth option, but,
employers are not obligated to offer this feature. Similar to a the ability
to self-direct investments, availability of loans or an in-service
distribution feature, the Roth is an optional feature that can be added to a
new or existing 401(k) plan at the discretion of the employer who sponsors
the plan.

[nawabe]

Hey thanks for the response.

Just so I'm clear.

If the employer has a 401 plan.
Employer decides to add the Roth option on January 1, 2006.
Lower level employees contribute zero dollars and spend their money on ice cream.
Upper level employees conribute the max into the Roth 401 option.
No problems with compliance/discrimination testing?

[tsj513]

yeah, no problem. as long as the option is given to everyone. the Roth contributions get pulled into the ADP test just like the traditional pre-tax contributions. so if all the HCEs are maxing out and the non-HCEs are buying ice cream, the plan is going to fail regardless of the Roth option.