Bottom Up QNEC Question

I have a question about bottom up QNECs. Let's say the employer wants to give a 5% QNEC to his employees because of the failed ADP test. Does the employer have to give the first contribution to the lowest paid employee and then give it to 2nd lowest paid employee, etc. until the test is passed, OR is the employer permitted to give the QNEC to anyone?

Every example I've seen has the employer giving the QNEC to the lowest paid employee first, but I was wondering if that's a requirement.

Thanks.

There's only one way to answer this question; you must read the plan's document.

Good Luck!

for example the FT William doc has the following

obviously other docs may be different. this is from the contribution section. but elsewhere in the doc you may have excluded, for example terminees from the QNEC, so it might not be the lowest paid employee

(A) First to the Qualified Non-Elective Contribution Account of the Participant who is a Nonhighly Compensated Employee with the lowest Compensation and is eligible to share in such allocations in an amount determined by the Company not to exceed 5% of such Participant's Compensation (the "Base QNEC Rate"). If any Qualified Non-Elective Contributions remain after the foregoing, the Company may then allocate Qualified Non-Elective Contributions to other Participants who are Nonhighly Compensated Employees eligible to share in such allocations with the next lowest Compensation in the amount of the Base QNEC Rate of Compensation until such contributions are fully allocated to one half of eligible Nonhighly Compensated Employees within the meaning of Treas. Reg. section 1.401(k)-2(a)(6)(iv)(B) (the "Base NHCEs"). Notwithstanding the foregoing, the Base QNEC Rate may exceed 5%; provided, that the Company contribution is sufficient to provide the Base QNEC Rate to all Base NHCEs.

... 

(E) Notwithstanding the foregoing, the Company may instead allocate the Qualified Non-Elective Contributions as a flat dollar amount pursuant to this Subsection (2). The Company may first allocate a flat dollar amount determined by the Company (the "Base QNEC Dollar Amount") to the Qualified Non-Elective Contribution Account of the Participant who is a Nonhighly Compensated Employee with the lowest Compensation and is eligible to share in such allocations...