A Plan requires last day employment to receive matching contributions (no hour requirement). A number of participants terminate during the year so that the match now does not pass coverage. The Plan uses a Fail Safe to correct coverage. None of the participants added back under the Fail Safe rules made salary deferrals.

Is it just the number of participants added back that matters, or would a contribution (QNEC?) need to be made for the added back participants?

As always thanks for any insight.

Take a look at Treas. Reg. 1.401(a)(4)-11. If you have a fail/safe provision in your document, you're probably okay. If you need to amend the document retroactively, it seems that you would need to provide them with a QNEC (the NHCEs ACP) regardless of their deferral amounts.

Thanks for the information. I guess it just "feels weird" to let participants in who do not benefit.

Participants only have to be eligible to receive a contribution for that provision to be included as benefiting for coverage purposes.

Thanks!