New AccuDraft Pro Update for QMAC-QNEC Amendment
As we mentioned last month, the IRS has issued a proposed regulation that revises the definition of qualified matching contributions (QMACs) and qualified non-elective contributions (QNECs) under the Code Sections 401(k) and 401(m) cash or deferred regulations, including those plans utilizing a safe harbor feature.
Changes to the Plan
This amendment allows 401(k) plans to start utilizing the new rules so that forfeited employer contributions would qualify as a QMAC or a QNEC if such contributions satisfy the nonforfeitability and distribution requirements features of those qualified contributions at the time they are allocated to participants instead of when they are contributed to the plan. Consequently, forfeitures designed to reduce future employer contributions may be used toward QNECs or QMACs in a failed ADP/ACP test or as a safe harbor contribution.
The proposed regulations will be effective for taxable years beginning on or after publication in final form, however, plans may utilize the changes for plan years beginning in 2017. If the final regulations are found to be more restrictive, such amendment will be applied after the date the regulations are finalized.
Good-faith Amendment Available
A good-faith amendment, signed by Document Agility, has been added to the Volume Submitter and Prototype Defined Contribution basic plan documents revising the QMAC and QNEC definitions and is also available in a separate PDF format on the AccuDraft website.
What do I need to do?
For your current 401(k) adopting employers, please provide a copy of the appropriate amendment to your adopting employer at your earliest convenience. Copies of the following four amendments in PDF format are available in the Amendments section of the the Resources page of the AccuDraft website at www.accudraft.com:
Compliance Amend QMAC QNEC - VS Contract Style
Compliance Amend QMAC QNEC - VS Adoption Agreement
Compliance Amend QMAC QNEC - NS Proto 401(k)
Compliance Amend QMAC QNEC - KSOP
No formal amendment is required by adopting employers, unless a plan has not been designed where forfeitures are used to reduce future contributions.
For those who use the KSOP plan, this document has been revised at the definitions of QMACs and QNECs to reflect the proposed regulations. In lieu of amending and outputting the entire KSOP document for this change, a separate amendment has been designed that may be adopted by sponsoring employers.
What is in this Update
We have create and published an update to your AccuDraft Pro system that contains the following items:
A good-faith amendment has been added at the end of the Volume Submitter Defined Contribution Contract Style plan document revising the QMAC and QNEC definitions.
A good-faith amendment has been added at the end of the Volume Submitter Defined Contribution Adoption Agreement basic plan document revising the QMAC and QNEC definitions.
A good-faith amendment has been added at the end of the NS Prototype Defined Contribution basic plan document revising the QMAC and QNEC definitions.
The KSOP has been amended at the definitions of QMAC and QNEC.
A gramatical correction was made to the Administrative Policies document in all of the plan types.
How to Install this Update
To install this new AccuDraft Pro update, follow these steps:
1. Navigate to the Resources Page of the AccuDraft website, or navigate to www.accudraft.com and click the "Resources" menu item.
2. You will be prompted to "Sign In", and you should already have login credentials. If you do, click the "I'm already a user, Login" link and enter your email and password. If not, enter the email and a password you'd like to use for the AccuDraft site.
3. On the Resources page, click the "AccuDraft Pro Updates" icon from the green icons menu. This will take you to the "AccuDraft Pro Updates" area of the Resources page. Click the blue "AccuDraft_Pro_Update_031717.hdi" link towards the upper left of the "AccuDraft Pro Update" area. This will bring you to a download page. Click the "Download" button. Be sure to note where the file is being downloaded (generally into your "Downloads" folder).
4. Once the file download is complete, navigate to the folder in which the update file (AccuDraft_Pro_Update_031717.hdi) was downloaded. Then double-click the file, and this will launch the update process.
5. When the install process begins, you will see a dialog box informing you that the update contains templates that override existing templates in your current library, which is the correct. Click "Override All" to allow the update program to install the newly updated templates and interviews to your AccuDraft Pro Library. Once the process is completed, the update will inform you that it has finished and you templates have been installed.
6. After the update, you will continue to launch the AccuDraft Pro program in the same way as before. There are no changes in how you access the program made by this release. When you open your AccuDraft Pro System, you can verify that the program was successfully updated by noting the Release Date of March 17, 2017 in the library's properties pane. This pane will also display a list of the items that have been updated as listed above.
Have a Question or Need Information?
As always, if you have any questions on this new update, feel free to contact us at 877-346-5994 or email@example.com.