What must be satisfied when making the decision to include QNECs in the ADRs?

Including Qualified Non-Elective Contributions (QNECs) in the Actual Deferral Rates (ADRs) requires satisfying nondiscrimination requirements. This is critical because the purpose of QNECs is to help maintain compliance with the IRS regulations that ensure benefit plans do not disproportionately favor highly compensated employees (HCEs) over non-HCEs.

When QNECs are added, they effectively boost the contributions made by lower-paid participants, which can enhance the plan's overall compliance with nondiscrimination tests, such as the Actual Deferral Percentage (ADP) test. By ensuring these contributions meet nondiscrimination testing, the plan can avoid potential penalties and maintain its qualified status.

The other options do not reflect the necessary considerations for including QNECs in ADRs. For instance, there is no requirement for all participants to agree, and focusing only on HCEs would negate the critical principle of providing equitable benefits across all employee levels. Thus, understanding the need to satisfy nondiscrimination requirements is vital for maintaining compliance and promoting fair benefit distribution in 401(k) plans.