What is the primary characteristic of a Qualified Non-elecive Contributions (QNEC)?

The primary characteristic of Qualified Non-Elective Contributions (QNECs) is that they are specifically designed to assist employees who may not have contributed enough to their retirement plans. QNECs are employer contributions made to a 401(k) or similar retirement plan on behalf of employees, typically to meet compliance requirements under the Internal Revenue Code. These contributions are often used to satisfy certain nondiscrimination tests or to rectify situations where employees do not meet the minimum deferral percentage required for participation in the plan.

In essence, QNECs provide a way to boost employee retirement savings, particularly for those who may not be saving adequately on their own, thereby enhancing overall plan participation and ensuring equitable treatment among employees with regards to retirement benefits. This characteristic underscores the importance of facilitating retirement readiness and addressing gaps in employee contributions.