QNEC

[Guest AJM 34]

Can someone point me in the right direction to find out where in the Regulations does it say that in order to receive a QNEC, you must have worked over 500 hours?

[Mike Preston]

No because it doesn't say that. Who told you that it did? I think there must be some context here that you have decided not to share.

[Guest AJM 34]

I am reading a very generic Plan Document, and trying to find out the eligibility requirements for a QNEC.

Since the last day rule for Non-Elective Contributions is more restrictive than for elective deferrals, do I follow the elective deferrals eligibilty?

It says:

(e) Qualified Non-Elective Contributions: Qualified Non-Elective Contributions contributed under Section 3.1(e) and Non-Elective Contributions contributed under Section 3.1© that are treated as QNECS will be allocated to the Qualified Non-Elective Contribution Account of an Eligible Participant in accordance with the following:

(1) Participants Eligible For Allocation: Subject to subparagraphs (2) and (3) below, Qualified Non-Elective Contributions will be allocated on behalf of each Eligible Participant who for the Plan Year is a Non-Highly Compensated Employee and is considered an Eligible Participant for the purpose of receiving a Non-Elective Contribution allocation for the Plan Year, or if Non-Elective Contributions are not permitted or if eligibility for Non-Elective Contributions is more restrictive than for Elective Deferrals, is considered an Eligible Participant only for the purpose of making Elective Deferrals.

(b) Non-Elective Contributions And Related Forfeitures: Any Participant who is an Employee on the last day of the Plan Year will be an Eligible Participant for that Plan Year for the purpose of receiving an allocation of Non-Elective Contributions (and any Forfeitures attributable thereto that are allocable to Participants under Section 3.4(b)) provided the Participant also completes at least 1,000 Hours of Service during the Plan Year. Any Participant who terminates employment with the Employer before the last day of the Plan Year will only be an Eligible Participant for that Plan Year for the purpose of receiving an allocation of Non-Elective Contributions and any Forfeitures attributable thereto that are allocable to Participants under Section 3.4(b) in accordance with the following provisions:

(a) Eligibility For Elective Deferrals: The eligibility requirements for the purpose of making Elective Deferrals to the Plan are as follows:

(1) General Eligibility Requirements: For the purpose of making Elective Deferrals only, an Eligible Employee described in subparagraph (2) will enter the Plan as a Participant on the applicable entry date in Section 2.2 upon reaching Age 21 and completing 1 Year of Service. An Employee will be deemed to have completed a Year of Service on the last day of the applicable eligibility computation period during which the Employee is credited with 1,000 Hours of Service.

[Guest fender5150]

I'll take a stab at this; keeping in mind I'm not an expert:

The document you copied states if you're not eligable for a non-elective deferral, then you're not eligable for a QNEC.

The document probably also states elsewhere that an eligable employee who works less than 500 hours in a year is terminated from the plan and is no longer eligable for a non-elective deferral.

That doesn't really answer your question though:

"Where in the regulations does it say you can't get a QNEC if you worked less than 500 hours?".

You may not find anything that specific in the regs, but based on the 500 hour rule, it makes sense that you're not eligable for a QNEC if you're not eligable for a NEC.

Forgive me for stating "it makes sense", 'cause the reg's don't necessarily make sense.

[BG5150]

I don't see anything about 500 hours in that document exerpt. Did I miss it?