True or False: If any QMACs are used in the ADP test, all QMACs must be disregarded in the ACP test.

The statement is false. In the context of qualified retirement plans, the Average Deferral Percentage (ADP) test and the Average Contribution Percentage (ACP) test are designed to ensure that plans do not disproportionately benefit highly compensated employees (HCEs) compared to non-highly compensated employees (NHCEs).

When conducting these tests, it is important to note that Qualified Matching Contributions (QMACs) can be included in the ACP test. The rules stipulate that QMACs that are taken into account during the ADP test do not automatically have to be disregarded in the ACP test. In fact, QMACs can be beneficial and may positively impact the ACP test results when calculated appropriately. This flexibility allows plan sponsors to ensure compliance while still taking advantage of matching contributions.

Understanding this distinction is critical for plan administrators to effectively navigate compliance testing and make informed decisions about contributions and testing methodologies.