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QNECS are subject to both 100% vesting and the distribution restrictions of Regulation 1.401(k)-1(d). To amplify Bri's response, the PW contributions also would need to be subject to the distribution restrictions in order to be treated as a QNEC (or as an ADP safe harbor contribution). That is why there is typically a specific election when drafting a document to treat such contributions as a QNEC (which would generally include treating them as an ADP safe harbor contribution).

Well, instead of the usual 5% cap for bottom-up QNEC purposes, Davis-Bacon amounts can be used up to 10% before the "representative rate" rule kicks in. You can use the prevailing wage amounts as safe harbor, if indicated in the document. Just obviously, if they're not 3% of pay for someone, then the employer would need to top them off. I presume that second question was theoretical, since you're running an ADP test.

A well-crafted plan would have a single default beneficiary provision that applies across the plan, or at least it would clearly state which provision governs in a given case. If I had to guess, I would say the drafters of the plan you describe were feeling cautious about IRC Section 411(d)(6) at the time of a prior merger, so they copied the full text (or most of it) of the other company's plan wholesale into an appendix, and wrote up something that says "this class of participants is entitled to benefits as provided in the core plan document, except to the extent that the applicable appendix says differently". As for the substantive difference between "participant's children" and "participant's children, per stirpes", the potential difference lies in how any grandchildren would be treated if their parent who was the participant's child is dead. Suppose that the participant has three children, one of whom is deceased, and all three of which have 2 children apiece. If a benefit is distributed per stirpes, then the deceased child is allocated 1/3 of the benefit, and then that third is divided in two and distributed to each of the deceased participant's children. Note that the other grandchildren still get nothing. If a benefit is distributed to the participant's "surviving children", then each of the two surviving children gets 50%. If the benefit is simply distributed to the participant's "children", then there is some ambiguity as to which of the above results was intended by the drafters (or perhaps some different result entirely).

Coverage test is always needed. It might automatically pass if there are no nonexcludable HCEs (or NHCEs, for that matter) but that is a different story. Assuming semi-annual entry dates: Senior manager A and regular slob B are both hired on 8/1/2020. A makes $30k/month, so $150k in 2020. B makes less. A is HCE for 2021 and B is not. A's entry date is 7/1/2021 and B's is 1/1/2022. If they were the only employees then the plan has a coverage failure for 2021 since the HCE is a participant but the NHCE is not. Contrived example aside, you have to test using the 6 month eligibility for everyone every year, even if you don't actually hire any senior managers that particular year. The otherwise excludable rule is available, and it may help you pass testing, or it may not.

Of course that assumes those individuals were truly independent contractors. If nothing in the relationship changed except the employer "flipped a switch" and presto chango now everyone is magically an employee, then there is certainly some risk that IRS could retroactively reclassify them as employees from the start. Absent one or more of these individuals pursuing/inquiring about this directly with IRS or DOL, the chances of such are probably slim but something of which the employer should be aware I would think.

IRC 3405(b)(1) and (2)

It's allowable as long as it passes the coverage test. You have to test coverage using the most permissive age and service conditions, so any employees who are not senior managers, who have completed 6 months of service, would have to be treated as non-excludable in the test.

Perhaps things have changed, but every payroll system I have worked with had a set of decisions for every deduction and income element - if only to get the various determinations correct - include in box 1, definition of covered compensation, ADP wage for testing (which may differ from covered comp). There always was a hierarchy. Very high on the list are cafeteria plan pre-tax deferrals which are pre tax for fica and fica-med. 401k pretax comes before federal and most state withholding, but not fica and fica-med, nor, oftentimes local income tax withholding. Roth would generally come after federal and state income tax withholding.

I actually had a client that extended their return, filed shortly after the original due date claiming the sizeable DBP deduction which generated a sizeable tax refund received before the extension expired and which they then used to fund the required DB contribution.

Hi Luke - this issue comes up on occasion. Revenue Ruling 66-144 permits the full extension period to make the contribution, even if the tax return has already been filed. Way back then, it only applied to accrual basis taxpayers because back then, 404(a)(6) only applied to accrual basis taxpayers. But then ERISA changed 404(a)(6) to include this for cash basis taxpayers.