When must QNECs be contributed to be counted for the ADP or ACP test?

QNECs, or Qualified Non-Elective Contributions, must be contributed no later than 12 months after the end of the plan year in which the contributions are meant to apply in order to be counted for the Actual Deferral Percentage (ADP) or Actual Contribution Percentage (ACP) tests. This is significant because these tests are designed to ensure that the contributions made to the 401(k) plan are proportionate among the highly compensated employees and non-highly compensated employees.

If QNECs are made within this timeframe, they can effectively help improve the plan's compliance with the ADP or ACP tests, which can reduce the need for corrective distributions. It is essential for plan sponsors to be aware of this timeline to ensure they can take advantage of QNECs in maintaining plan compliance. The other choices either represent incorrect timing for contributions or are not aligned with the established requirements set by the IRS regarding QNEC contributions and their relevance to testing.