15 ITEM SET 9: SEPS Robert "Bubba" Breaux, 32, owns and operates a po'boy shop in New Orleans, called Ya Mama's Po Boys. It is a family business that sells authentic New Orleans fare, just like "ya mama would serve," assuming she was from New Orleans. Bubba wants to establish a retirement plan so he can save for his retirement and the retirement of his employees on a tax-deferred basis. He has recruited you to assist in making a plan selection. Bubba only wants to contribute in years that he makes a profit and does not want to incur much if anything on administrative expenses. Since the employees of Ya Mama's are all family members, Bubba is happy to contribute on behalf of the employees when the restaurant is doing well. 1. Based on Bubba's objectives, what type of retirement plan is most suited for his needs? Answer: 2. Why might you recommend that Bubba utilize a qualified profit-sharing plan with a CODA in lieu of the suggestion in question 1? (If you suggested a profit-sharing plan with a CODA for question 1, reconsider.) Answer: Item Set 9: SEPS 843 3. Bubba employs the following individuals. Which employees may he exclude if the plan was a SIMPLE, SEP, or 401(k) profit-sharing plan? Answer: Name Age Years of Service Full-Time/ Part-Time ( <1,000 hours) Annual Income Bubba 32 13 Full-Time $160,000 Mama 49 4 Full-Time $35,000 Trey 22 2 Full-Time $32,000 Aaron 28 4 Part-Time (650 hours) $26,000 Dixie 18 1 Part-Time (400 hours) $12,000 844 Chapter 15: Item Sets and the Mike & Maria Roman Case