Close
Close

IRS publishes final regulations for 401(k) plans addressing QMACs and QNECs

RFP
Tax Hot Topics newsletterThe IRS published final regulations (T.D. 9835) amending the definitions of qualified matching contributions (QMACs) and qualified non-elective contributions (QNECs) for certain qualified retirement plans that contain cash or deferred arrangements under Section 401(k). Under these regulations, employer contributions to a plan are QMACs or QNECs if they satisfy the applicable non-forfeitability requirements and distribution limitations when allocated to plan participant accounts, rather than at the time of contribution. The regulations allow amounts forfeited by former plan participants to be used to fund QMACs and QNECs.

According to the preamble to the regulations, Section 411(d)(6), which prohibits plan amendments that decrease the accrued benefits under the plan, does not apply to plan sponsors who adopt plan amendments to define QMACs and QNECs consistently with the final regulations if applied on a prospective basis. 

The regulations are effective July 20, 2018, and apply to plan years beginning on or after July 20, 2018. Taxpayers may apply these regulations to earlier periods.

Contact Jeffrey Martin
Partner
Washington National Tax Office
T +1 202 521 1526

Tax professional standards statement 
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.