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February 16, 2009

Nondeductible employee contribution (NEC)

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Definition

Contribution made by a participant to an employer sponsored plan on an after-tax basis. Nondeductible employee contributions are typically made to a 401(k) or 403(b) plan. Nondeductible employee contribution are usually maintained in separate accounts from other plan assets

Referring Cite

IRC § 401(k), IRC § 403(b),

Additional Helpful Information

  • Nondeductible employee contributions are subject to the actual contribution percentage test
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