11 multiple choice question, the question is attached.

Retirement Planning, 12th Edition Chapter 3 Homework Questions CHAPTER 3 HOMEWORK QUESTIONS Name ________________________________________________ Circle your answer for each of the following multiple choice questions. Multiple selections will be counted as incorrect answers. 1. Which of the following is an example of a qualified retirement plan? a. b. c. d. 2. Cash or deferred arrangement (CODA). 457 plan. ESOP. ISO Plan. Urban LLC sponsors a profit-sharing plan that requires employees to complete one year of service and be 21 years old before entering the plan. The plan also excludes all commissioned sales people and all other allowable exclusions allowed under the IRC. Which of the following employees could be excluded? 1. Jack, age 20, who works in administration and has been with the company for 32 months. 2. Jen, a commissioned sales person working in the Houston office. She is 37 years old and has been with the company for 3 years. 3. John works as the lead foreman in the company factory. Jack is 39 and has been with the company for 12 years and is covered under a collective bargaining agreement. a. 1 only. b. 3 only. c. 1 and 2. d. 1, 2 and 3. 3. Which of the following people would be considered a highly compensated employee for 2017? 1. 2. 3. 4. Amy, a 2% owner whose salary last year was $165,000. Red, a 6% owner whose salary was $23,500 for the last five years. Reese, an officer, who earned $115,000 last year and is the sixth highest paid employee of 96 employees. Hank, a 0.5% owner who earned $127,000 last year and is in the top 20% of paid employees. a. 1 and 4. b. 1, 2, and 4. c. 1, 3, and 4. d. 1, 2, 3, and 4. 2017, MONEY EDUCATION Retirement Planning, 12th Edition 4. Chapter 3 Homework Questions Acme Inc. has 200 total employees, 150 of which are nonexcludable employees. Ten employees are highly compensated. Seven of the 10 highly compensated and 100 of the 140 nonhighly compensated employees are covered under Acme's qualified plan. The average accrued benefits for the highly compensated is 3% and the average accrued benefit for the nonhighly compensated is 1.5%. Which of the following statements is true regarding coverage? 1. The plan passes the ratio percentage test. 2. The plan passes the average benefits test. a. 1 only. b. 2 only. c. Both 1 and 2. d. Neither 1 nor 2. 5. Tidewater Company has 1,000 eligible employees and sponsors a defined benefit pension plan. The company is unsure if they are meeting all of their testing requirements. How many employees (the minimum) must be covered by Tidewater's defined benefit pension plan for the plan to conform with ERISA? a. b. c. d. 6. 40. 50. 400. 500. Axe company sponsors a 401(k) profit sharing plan with no employer match, but the company did make noncontributory employer contributions because the plan was top-heavy. Jack quit today after six years working for Axe and has come to you to determine how much of his retirement balance he can take with him. The plan uses the least generous graduated vesting schedule available. What is Jack's vested account balance if he has been a participant for 57 months? CONTRIBUTIONS EARNINGS a. b. c. d. 7. EMPLOYER $9,000 $4,000 EMPLOYEE $12,000 $5,000 $17,000. $24,800. $27,400. $30,000. ABC Inc. sponsors a defined contribution plan. Seth, age 39, has compensation of $150,000 for the year. ABC has made a $20,000 profit sharing plan contribution for Seth and $5,000 of plan forfeitures were allocated to Seth's profit sharing plan during the year. How much can Seth defer into his CODA plan (401(k) plan) for 2017? a. b. c. d. $18,000. $24,000. $29,000. $34,000. 2017, MONEY EDUCATION Retirement Planning, 12th Edition 8. Chapter 3 Homework Questions XYZ covered the following employees under its qualified plan. 1. Rob, a 4% owner and employee with compensation of $32,000. 2. Robin, Rob's cousin, a commissioned salesperson with compensation of $160,000 last year (the highest paid employee). Robin owns 2% of the company stock. 3. Randy, the chief operating officer, who had compensation of $155,000 last year, but was not in the top 20% of paid employees. Assuming the company made the 20% election when determining who is highly compensated, which of the following statements is correct? a. b. c. d. 9. Rob and Robin are both key employees. Robin is a key employee, but Rob is not. Randy is a key employee, but not a highly compensated employee. Neither Rob, Robin, or Randy are highly compensated employees or key employees. Qualified plan documents can be written to accommodate plan forfeitures in different ways. Which of the following statements is correct? a. Stock bonus plans always allocate plan forfeitures to participants' accounts since it is a stock plan. b. Safe harbor 401(k) plans never allocate plan forfeitures of matching contributions to participants' accounts. c. Defined benefit plans (but not cash balance plans) have two options to deal with forfeitures. d. Employers can use the forfeited funds to pay other expenses of the business outside the qualified plan. 10. Which of the following vesting schedules may a top-heavy qualified cash balance plan use? a. b. c. d. 2 to 6 year graduated. 3-year cliff. 3 to 7 year graduated. 5 year cliff. 11. Qualified plans must satisfy many tests to maintain qualified status. Which of the following is correct regarding coverage tests? a. b. c. d. Defined benefit plans must pass any two of the four coverage tests. Coverage testing never includes leased employees as part of the calculation. Stock bonus plans must satisfy one of three coverage tests only. Employees who do not meet the eligibility requirements are still included in the determination of at least one of the coverage tests. 2017, MONEY EDUCATION