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QNEC

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AcronymDefinition
QNECQualified Nonelective Contribution (qualified retirement plans)


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Under the proposal, a participant's QNEC or QMAC cannot be taken into account for the ADP or ACP test to the extent that it exceeds the greater of 5% of compensation or twice the plan's "representative" nonhighly compensated employee (NHCE) ADP or ACP, which is the median (not average) ADP or ACP of the NHCE participants.
A QNEC is an employer contribution that is permitted to one or more non-highly compensated employees for the sole purpose of ensuring that their overall average deferral percentage is increased.
 
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