Davis Bacon Plan and QNECs for HCEs

[Vlad401k]

We have a plan that is considered a Davis Bacon plan. The company made QNECs as part of the prevailing wage arrangement some HCEs and NHCEs. I understand that up to 10% of compensation can be used for NHCEs in the ADP and ACP tests, however, do the QNECs for HCEs have to counted in either of those tests as well or can the HCE QNECs be ignored for testing purposes?

[Belgarath]

I'm not aware of any provision that would allow you to exclude these contributions to the HC from the tests.

[KATS]

I work on a Davis Bacon Plan where the Davis Bacon contributions can be allocated as a QNEC. The remaining Davis Bacon contributions may be used to offset the employer profit sharing contributions. The plan was written to exclude HCE Davis Bacon contributions to the plan, so the HCE issue is avoided.