Kryptonite is a telecommunications provider located in Iowa with hundreds of thousands of employees. Their CEO, Clark Klein, is considering the replacement of their expensive Defined Benefit (DB) Pension Plan which requires large contributions every year with a 401(K) where the employees will bear the investment risk. The majority of the workforce is young, and the top executives are all in their 50s and 60s.

1. Clarks top financial advisor, what type of qualified retirement plan would you recommend instead of the 401(k) if he wants the majority of the benefits to accrue to the top executives? Please support your answer in 3 to 4 sentences.

2. An intern who works for you recommend utilizing a DB/K plan, which is a combination DB and 401(k) plan. What is your opinion of using such a plan in this case?

3. Who would benefit the most from the change away from the DB plan to a 401(k)?

4. What is the maximum contribution to a 401(k) of a worker age 56, $20,000 per year as a factory work out with Kryptonite?

5. Lois Kent has been with kryptonite but is nervous now that Clark has taken over operations. She wanted to know her options regarding taking money out of the 401(k) at a later date. You correctly tell her that she can access her 401(k) funds without penalty under what eight circumstances?

6. Clark has heard that the ADP testing is an issue for 401(k) plans. What are the 3 ways to minimize this issue? Please provide 3-4 sentences explaining each of the three ways.