The corrective qualified nonelective contribution (QNEC) is an employer contribution that's intended to replace the lost opportunity to a participant who wasn't permitted to make elective deferrals. The QNEC must be 100% vested and subject to the same distribution restrictions as elective deferrals.

What is a nonelective contribution in a 401k plan?

Non-elective contributions are payments made towards an eligible employee's retirement plan, regardless of whether the employee makes contributions to the plan or not. Non-elective contributions are not deducted from the employee's salary and are instead funded directly from the employer's account.

What are qualified matching contributions?

Qualified Matching Contributions (QMACs) are like QNECs, except rather than being non-elective, they are matching contributions, made as a percentage of the employee's elective deferral. They are typically used to help you pass the ACP test — much the same way that QNECs are used to help you pass the ADP test.