Unless otherwise provided, the definitions of this section govern for purposes of
section 401(m) and the regulations thereunder.
Actual contribution percentage (ACP). Actual contribution percentage or
ACP means the ACP of the group of eligible employees as defined in
§ 1.401(m)-2(a)(2)(i).
Actual contribution percentage (ACP) test. Actual contribution percentage test or
ACP test means the test described in
§ 1.401(m)-2(a)(1).
Actual contribution ratio (ACR). Actual contribution ratio or
ACR means the ACR of an eligible employee as defined in
§ 1.401(m)-2(a)(3).
Actual deferral percentage (ADP) test. Actual deferral percentage test or
ADP test means the test described in
§ 1.401(k)-2(a)(1).
Compensation. Compensation means compensation as defined in
section 414(s) and
§ 1.414(s)-1. The period used to determine an employee's compensation for a plan year must be either the plan year or the calendar year ending within the plan year. Whichever period is selected must be applied uniformly to determine the compensation of every eligible employee under the plan for that plan year. A plan may, however, limit the period taken into account under either method to that portion of the plan year or calendar year in which the employee was an eligible employee, provided that this limit is applied uniformly to all eligible employees under the plan for the plan year. See also
section 401(a)(17) and
§ 1.401(a)(17)-1(c)(1). For this purpose, in case of an HCE whose ACR is determined under
§ 1.401(m)-2(a)(3)(ii), period of participation includes periods under another plan for which matching contributions or employee contributions are aggregated under
§ 1.401(m)-2(a)(3)(ii).
Current year testing method. Current year testing method means the testing method under which the applicable year is the current plan year, as described in
§ 1.401(k)-2(a)(2)(ii) or 1.401(m)-2(a)(2)(ii)
Elective contributions. Elective contributions means elective contributions as defined in
§ 1.401(k)-6.
Elective deferrals. Elective deferrals means elective deferrals described in
section 402(g)(3).
Eligible employee—(1) General rule. Eligible employee means an employee who is directly or indirectly eligible to make an employee contribution or to receive an allocation of matching contributions (including matching contributions derived from forfeitures) under the plan for all or a portion of the plan year. For example, if an employee must perform purely ministerial or mechanical acts (e.g., formal application for participation or consent to payroll withholding) in order to be eligible to make an employee contribution for a plan year, the employee is an eligible employee for the plan year without regard to whether the employee performs these acts.
(2) Conditions on eligibility. An employee who is unable to make employee contributions or to receive an allocation of matching contributions because the employee has not contributed to another plan is also an eligible employee. By contrast, if an employee must perform additional service (
e.g., satisfy a minimum period of service requirement) in order to be eligible to make an employee contribution or to receive an allocation of matching contributions for a plan year, the employee is not an eligible employee for the plan year unless the service is actually performed. An employee who would be eligible to make employee contributions but for a suspension due to a distribution, a loan, or an election not to participate in the plan, is treated as an eligible employee for purposes of
section 401(m) for a plan year even though the employee may not make employee contributions or receive an allocation of matching contributions by reason of the suspension. Finally, an employee does not fail to be treated as an eligible employee merely because the employee may receive no additional annual additions because of
section 415(c)(1).
(3) Certain one-time elections. An employee is not an eligible employee merely because the employee, no later than the employee's first becoming eligible under any plan or arrangement described in
section 219(g)(5)(A) and providing for employee or matching contributions, is given a one-time opportunity to elect, and the employee in fact does elect, not to be eligible to make employee contributions or to receive allocations of matching contributions under the plan or any other plan or arrangement maintained by the employer (including plans not yet established) for the duration of the employee's employment with the employer. In no event is an election made after December 23, 1994, treated as a one-time irrevocable election under this paragraph if the election is made by an employee who previously became eligible under another plan or arrangement (whether or not terminated) of the employer.
Eligible HCE. Eligible HCE means an eligible employee who is an HCE.
Eligible NHCE. Eligible NHCE means an eligible employee who is not an HCE.
Employee. Employee means an employee within the meaning of
§ 1.410(b)-9.
Employee contributions. Employee contributions means employee contributions as defined in
§ 1.401(m)-1(a)(3).
Employee stock ownership plan (ESOP). Employee stock ownership plan or
ESOP the portion of a plan that is an ESOP within the meaning of
§ 1.410(b)-7(c)(2).
Employer. Employer means an employer within the meaning of
§ 1.410(b)-9.
Excess aggregate contributions. Excess aggregate contributions means, with respect to a plan year, the amount of excess aggregate contributions apportioned to an HCE under
§ 1.401(m)-2(b)(2)(iii).
Excess contributions. Excess contributions means with respect to a plan year, the amount of excess contributions apportioned to an HCE under
§ 1.401(k)-2(b)(2)(iii).
Excess deferrals. Excess deferrals means excess deferrals as defined in
§ 1.402(g)-1(e)(3).
Highly compensated employee (HCE). Highly compensated employee or
HCE has the meaning provided in
section 414(q).
Nonelective contributions. Nonelective contributions means employer contributions (other than matching contributions) with respect to which the employee may not elect to have the contributions paid to the employee in cash or other benefits instead of being contributed to the plan.
Non-employee stock ownership plan (non-ESOP). Non-employee stock ownership plan or
non-ESOP means the portion of a plan that is not an ESOP within the meaning of
§ 1.410(b)-7(c)(2).
Non-highly compensated employee (NHCE). Non-highly compensated employee or NHCE means an employee who is not an HCE.
Prior year testing method. Prior year testing method means the testing method under which the applicable year is the prior plan year, as described in
§ 1.401(k)-2(a)(2)(ii) or 1.401(m)-2(a)(2)(ii)
Qualified matching contributions (QMAC). Qualified matching contributions or
QMAC means matching contributions that satisfy the requirements of
§ 1.401(k)-1(c) and (d) at the time the contribution is made, without regard to whether the contributions are actually taken into account as elective contributions under
§ 1.401(k)-2(a)(6). See also
§ 1.401(k)-2(b)(4)(iii) for a rule providing that a matching contribution does not fail to qualify as a QMAC solely because it is forfeitable under
section 411(a)(3)(G) because it is a matching contribution with respect to an excess deferral, excess contribution, or excess aggregate contribution.
Qualified nonelective contributions (QNEC). Qualified nonelective contributions or
QNEC means employer contributions, other than elective contributions or matching contributions, that satisfy the requirements of
§ 1.401(k)-1(c) and (d) at the time the contribution is made, without regard to whether the contributions are actually taken into account under the ADP test under
§ 1.401(k)-2(a)(6) or the ADP test under
§ 1.401(m)-2(a)(6).
Treas. Reg. § 1.401(m)-5 — Definitions. · CFR 2005 annual edition (revised as of 2005-04-01) · https://pensionresource.website/EAMain?content=EAMain.Law&id=cfr26-1.401%28m%29-5&asof=1989-03-27 · printed Oct 16, 2026