Basic QNEC question-failed ADP

[ratherbereading]

12/31/2024 plan and it  failed the ADP test. The test (current year) was split into excludables and non-excludables and the non-excludable test failed.  Client wants to go with the QNEC. Basic  question I know, but I have never had a client choose this route.   How do I calculate the $10,000 plus QNEC? Based on compensation for the plan year?  Also, does it go to all eligibles or just the people on the failed non-excudable test? 

TYIA! 

[BG5150]

Check your plan document first.

[ratherbereading]

15 minutes ago, BG5150 said:

Check your plan document first.

Ah. Good idea.  This is what it says - but still not clear if ALL EEs get it or just the non-excludables.  

[Bri]

Is that an ASC document?  I think they have separate QNEC options available, depending on how you filled out that 6D.  Something where the BPD allows much more limited QNEC options unless you choose that "special contributions" option in 6D.  Coordinate 6-D1's italicized notes with the BPD.

[Paul I]

This does look like language from the ASC Adoption Agreement.  @ratherbereading if you look in the Basic Plan Document on page 33, you will find there are 4 different methods to allocate a Targeted QNEC.  The language gives a fair amount of details for how each method works.