Failed ACP -Using QMAC for correction

[BShawn]

I have a plan that failed ACP and the client wants to contribute a QMAC to fix it (given to only those who defer).  Less than half of the eligible employees deferred.   I believe the disproportionate rules that apply to QNEC's also apply to QMAC's, correct?  If so, then the Representative Contribution Rate would be zero, since less than half of the eligible employees received match.  Does that mean that they cannot contribute a QMAC to correct the ACP Failure?

[BShawn]

I did some research and found that a QMAC can be used to correct the ACP test up to the extent that the match exceeds the greater of 100% of deferral, 5% of compensation or 2x the Representative Contribution Rate.  

New Question:  Assuming a plan already contributes a matching contribution, is the 100% or 5% limits based on the QMAC calculation only, or the matching contribution plus the additional QMAC?

[Belgarath]

Ignore - I had a partial brain cramp.

[Tom Poje]

I can't remember things like that but ERISA Outline Book has

Chapter 11 Part C 1.h

1.h.2004 regulations disregard disproportionate matching contributions allocated to NHCs…

1.h.9)QMACs. Remember that all matching contributions are taken into account to determine the matching rate described above, even if any portion of those matching contributions are QMACs (see 1.a.2) above

 

then in the supplement I have (where it came from I have no idea) - though deleting a post about eating crow doesn't get Belgareth off the hook

Summer Crow Kabobs submitted by Gordon Krause (Crow Busters Founder)

Ingredients 16 pieces of crow breast meat (no bones) (8 crows) 16 pieces of green pepper 16 cherry tomatoes 8 button mushrooms 8 ears of sweet corn 1 1/2 cups of Teriyaki sauce 1/2 cup melted butter 8 kabob skewers

Preparation Cut each piece of crow in half and place in a covered bowl with the Teriyaki sauce over night. Clean and cut each ear of corn into 3 pieces. Cook in boiling salt water for 10 minutes. Alternately put corn (3 pieces), green peppers (3 pieces) and cherry tomatoes (3) along with 4 pieces of crow meat on each skewer. Use 1 mushroom to top each skewer. Brush with melted butter and place on preheated grill for about 4 minutes. Flip, butter again and place back on grill for another 4 minutes. Repeat one last time for a total of 12 minutes or until they appear done. Serves four adults.

[ETA Consulting LLC]

I think I follow his question; and it appears to be two fold.  You have two distinct calculations at play here:
1) You may make your targeted QMAC at the 5% or 100% level.....  That is a given; irrespective of anything else.
2) When determining 2X the representative rate, you must then determine your "matching contribution rate", which would take into account ALL matching contributions. But, you're not even considering this until you've fully allocated under item "1".

So, you can always do number "1".  In the event you complete number "1" and wish to allocate further, you would then calculate the allocation under "2" should it provide a higher limit that the ones already provided under "1". 

Basically, "matching contribution rate" does not come into play until AFTER you've fully allocated your targeted QMAC under item "1".

I think it's worth mentioning that it would help you have a good relationship with your plan document when doing it. A well written document should make these distinctions.

Good Luck!

[Belgarath]

Can't get away with anything! Tom, I prefer my crow in a pie, with lots of gravy and a double crust. Unfortunately, it seems to be a regular part of my diet. The loss of brain cells is a geometric progression!

[Tom Poje]

Belgareth - never had crow pie - I'd rather have a cow pie (at least from Baraboo).

and especially if it is dark chocolate!