1. Seth, who is about 55 years old, runs a local Po-Boy shop in New Orleans. He has several high school kids who work for him part time. Seth's mom, Robin, helps make the best meatballs in the universe and works there full time. Which of the following plans makes the most sense for Seth if he earns about $120,000 and does not want to spend too much on a retirement plan? a. Money purchase plan. b. Tandem plan. C. Cash balance plan. d. 401(k) / profit sharing plan. 2. The Actual Deferral Percentage (ADP) test is one of the tests that some qualified plans must comply with. Which of the following plans must generally comply with the ADP test? 1. Profit-sharing plans. 2. Safe harbor 401(k) plans. a. I only. b. 2 only. c. Both 1 and 2. d. Neither 1 nor 2. 3. Jack and Jill own a successful engineering company, which sponsors a 401(k) plan that requires standard eligibility. Sam, Tom and Pat are the only other employees, who are between the ages of 25 and 29 and have been with the company for a couple of years. Jack and Jill each have salaries of $200,000, while their employees have salaries ranging between $28,000 and $30,000. Jack and Jill both defer $10,000 each. Sam, who is Jack and Jill's son, earns $30,000 and defers $6,000 into the 401(k) plan. Tom, who makes $28,000, defers $2,800, while Pat does not defer anything into the 401(k) plan. Which of the following statements is correct? a. The ADP for the NHC employees is 6.67% b. Jack and Jill are the only highly compensated employees. c. If the plan failed the ADP test, then the issue could be solved by providing a qualified matching contribution to all five employees. d. If the company hired a new employee, it would not increase the amount that Jack and Jill can defer during the first year of the employee's employment? 1. Seth, who is about 55 years old, runs a local Po-Boy shop in New Orleans. He has several high school kids who work for him part time. Seth's mom, Robin, helps make the best meatballs in the universe and works there full time. Which of the following plans makes the most sense for Seth if he earns about $120,000 and does not want to spend too much on a retirement plan? a. Money purchase plan. b. Tandem plan. C. Cash balance plan. d. 401(k) / profit sharing plan. 2. The Actual Deferral Percentage (ADP) test is one of the tests that some qualified plans must comply with. Which of the following plans must generally comply with the ADP test? 1. Profit-sharing plans. 2. Safe harbor 401(k) plans. a. I only. b. 2 only. c. Both 1 and 2. d. Neither 1 nor 2. 3. Jack and Jill own a successful engineering company, which sponsors a 401(k) plan that requires standard eligibility. Sam, Tom and Pat are the only other employees, who are between the ages of 25 and 29 and have been with the company for a couple of years. Jack and Jill each have salaries of $200,000, while their employees have salaries ranging between $28,000 and $30,000. Jack and Jill both defer $10,000 each. Sam, who is Jack and Jill's son, earns $30,000 and defers $6,000 into the 401(k) plan. Tom, who makes $28,000, defers $2,800, while Pat does not defer anything into the 401(k) plan. Which of the following statements is correct? a. The ADP for the NHC employees is 6.67% b. Jack and Jill are the only highly compensated employees. c. If the plan failed the ADP test, then the issue could be solved by providing a qualified matching contribution to all five employees. d. If the company hired a new employee, it would not increase the amount that Jack and Jill can defer during the first year of the employee's employment
