What contributions are included in annual additions for a 401(k) plan?

Annual additions for a 401(k) plan encompass a wide range of contributions that can impact the plan's compliance with various regulatory limits. The correct answer includes elective deferrals made by employees, after-tax contributions made by employees, employer contributions, and amounts that might be considered forfeitures.

Elective deferrals are the contributions that employees choose to defer from their salary into their 401(k) plan. After-tax contributions are additional contributions made by employees beyond their pre-tax or Roth contributions. Employer contributions, including matching contributions and discretionary contributions, also form a critical part of the total additions. Forfeitures refer to amounts that become available due to employees who leave the plan before vesting, and these can also enhance the contributions available to other employees in the plan.

By considering all these elements, the plan ensures that it is adequately funded and compliant with the annual addition limits imposed by the IRS, which are designed to prevent excessive benefits accumulation in defined contribution retirement plans. This broad inclusion helps in managing compliance while maximizing benefits for all plan participants.