Case 2:Medical Testing Corp.

Brendon, the owner of Medical Testing Corp is interested in adopting a retirement plan.He does not have experience in this area, but he has been "reading up" on options.He has come to you to provide a contribution comparison of using a SEP plan, SIMPLE plan or 401K plan for his company.

Brendon wants you to assume he is going to MAXIMIZE the amount of funds he can personally contribute to the plan (within the rules of course) from both his own salary deferrals and any company contribution, while at the same time, restricting the participation in the plan to EXCLUDE the most employees as the rules allow.

Assume each employee is intending to contribute 6% of their salary/earnings when able.

Assume Medical Testing Corp. will match 3% when able.

Assume ALL employees have been with Medical Testing Corp. for 3+ years

EmployeeStatusAge in 2020W-2 income

BrendonOwner60 $200,000

BettyManager49$100,000

ToddSales47$100,000

NancyAdministration43 $100,000

MatthewSon of Brendon33 $ 70,000

5 additional

EmployeesRank and file25-45@ $50 k avg. salary each

3 part-time

Employeespart time18, 22, 24750 hrs. @$12/hr. each

For this Case, please provide a breakdown of:

The contribution to the retirement plan from each employee, for each of the 3 plan option proposals.

The contribution from Medical Testing Corp. to each employee that would be credited for each of the 3 plan option proposals.

Clearly identify ANY ineligible employees for each of the 3 plan option proposals.

Clearly identify any ADP testing considerations when appropriate.