QNEC Allocation

[Guest Tina Pickard]

I have an ADP test failure, which the employer wants to correct using a QNEC. According to the document, "the Employer may contribute into the Plan, on behalf of each Non-Highly Compensated Participant, who elects to defer a portion of his Compensation into the Plan for the Plan Year, as provided in Section 3.02 of the Plan, a discretionary Qualified Non-Elective Contribution equal to a uniform percentage of each such eligible inidividual's Compensation, the exact percentage of which, if any, shall be determined by the Employer." In this particular plan year, 7 participants can be placed in the separate "non-statutory" test, which passes (of course since no HCE's). Three of these participants have deferrals. Do I have to allocate the same percentage QNEC to these participants? Of course it is not helping my test by doing so, but adding the 7 participants and doing one complete ADP test makes it fail worse. Help!

[Blinky the 3-eyed Fish]

Follow your plan document. It is your friend.