Allocation of Qualified Nonelective Contributions Clause Samples
The Allocation of Qualified Nonelective Contributions clause defines how employer contributions, made to correct certain nondiscrimination testing failures in retirement plans, are distributed among eligible employees. Typically, this clause outlines the criteria for which employees receive these contributions and the method used to allocate the funds, such as a uniform percentage of compensation. Its core function is to ensure the retirement plan remains compliant with IRS nondiscrimination requirements by providing additional contributions to non-highly compensated employees, thereby maintaining the plan's qualified status.
Allocation of Qualified Nonelective Contributions. Allocation of Qualified Nonelective Contributions to Participants entitled thereto shall be made (Choose one):
Option 1: [ ] In the ratio which each Participant's Compensation for the Plan Year bears to the total Compensation of all Participants for such Plan Year.
Option 2: [ ] In the ratio which each Participant's Compensation not in excess of _____________ for the Plan Year bears to the total Compensation of all Participants not in excess of _____________ for such Plan Year.
Allocation of Qualified Nonelective Contributions. Allocation of Qualified Nonelective Contributions to Participants entitled thereto shall be made (Choose one):
Allocation of Qualified Nonelective Contributions. If the Employer has elected to use Current Year Testing, then on behalf of each Nonhighly Compensated Participant, the Employer may, at its sole discretion, make a Qualified Nonelective Contribution equal a percentage between 0% to 10% of each eligible individual’s Compensation, the exact percentage to be determined each year by the Employer.
(1) The Employer shall have the sole discretion to designate which Nonhighly Compensated Participants, if any, shall receive a Qualified Nonelective Contribution, if any, for any Plan Year.
(2) In any Plan Year, the Employer may designate which test, either as described in Section 3.05 or as described in Section 3.09 to which such Qualified Nonelective Contributions, if any, shall be applied.
Allocation of Qualified Nonelective Contributions. Qualified Nonelective Contributions shall be allocated to the Accounts of Members who are designated by an Employer as eligible to share therein in such amounts as such Employer directs.
Allocation of Qualified Nonelective Contributions. Allocation of Qualified Nonelective Contributions (other than those, if any, allocated pursuant to Plan Section 3.05 to satisfy nondiscrimination tests) will be made (select one):
Allocation of Qualified Nonelective Contributions. Allocation of Qualified Nonelective Contributions to Participants entitled thereto shall be made (select one):
Option 1: þ Targeted QNEC. In an amount, determined pursuant to Plan Section 3.05, required to satisfy either the Actual Deferral Percentage test described in Plan Section 3.13, the Actual Contribution Percentage test described in Plan Section 3.14, or both.
Option 2: ¨ Pro Rata – Non-Highly Compensated Employee Participants. In the ratio that each non-Highly Compensated Employee Participant’s Compensation for the applicable Plan Year bears to the total Compensation of all non-Highly Compensated Employee Participants for such Plan Year.
Allocation of Qualified Nonelective Contributions. Allocation of Qualified Nonelective Contributions to Participants entitled thereto shall be made (choose one):
Allocation of Qualified Nonelective Contributions. If the Employer has elected to use Current Year Testing, then on behalf of any Nonhighly Compensated Participant, the Employer may, at its sole discretion, make a Qualified Nonelective Contribution that does not exceed the product of the Nonhighly Compensated Participant’s compensation and the greater of 5% or two times the Plan’s Representative Contribution Rate.
(1) The Representative Contribution Rate is the greater of (a) the lowest applicable contribution rate of any eligible Nonhighly Compensated Participant among a group of eligible Nonhighly Compensated Participants that consists of half of all eligible Nonhighly Compensated Participants for the Plan Year or (b) the lowest applicable contribution rate of any eligible Nonhighly Compensated Participant who is employed by the Employer on the last day of the Plan Year. The applicable contribution rate is the sum of Qualified Nonelective Contributions and Qualified Matching Contributions for the Nonhighly Compensated Participants, divided by Nonhighly Compensated Participants’ compensation for the Plan Year.
(2) In any Plan Year, the Employer may designate which test, either as described in Section 3.03 or as described in Section 3.08 to which such Qualified Nonelective Contributions, if any, shall be applied.