Which coverage test are QMACs tested under?

QMACs, or Qualified Matching Contributions, are specifically evaluated under the provisions of 401(m). This section of the Internal Revenue Code focuses on the testing of contributions made by employers in relation to employee elective deferrals. The 401(m) coverage tests ensure that the matching contributions do not disproportionately favor highly compensated employees over non-highly compensated employees. By assessing these contributions against the requisite nondiscrimination rules, regulatory compliance is determined, ensuring fairness and equality within the benefit structure provided by the plan.

The connection between QMACs and 401(m) derives from the requirement that any qualified matching contributions must also meet the same nondiscrimination testing as salary deferrals, emphasizing the balancing act between employee benefits across different compensation levels.