1. Matt works for Rowan University and has an annual income of $200,000. Assume Matt has a combined tax rate of 25%. In addition to salary, Matt receives health insurance, long term disability insurance and life insurance from Rowan.
2. 1. Rowan offers health insurance on a non-contributory basis. The premium is $8,000 per year. What would Matts total yearly income tax liability. [2 points]

2. Matt decides to put $4,000 into a dependent care flexible spending account. What would be the total yearly income tax liability for Matt now? (2 points)

3. If Matt should become disabled, he could no longer work for Rowan and would lose his $200,000 annual income. The long-term disability contract promises to pay Matt $100,000 per year should he become disabled.

Rowan also offers long term disability insurance on a non-contributory basis. The premium is $5,500 per year.

If Matt should become disabled, what would be his total yearly income tax liability? (3 points)

4. Suppose Rowan offers long-term disability insurance described in (1c) on an employee pay all basis. Suppose Matt paid the entire premium cost of $5,500 per year using a pre-tax salary reduction arrangement.

If Matt should become disabled, what would be his total yearly income tax liability? (3 points)

5. Suppose Rowan offers long-term disability insurance described in (1c) on an employee pay all basis. Suppose Matt paid the entire premium cost of $5,500 per year using an after-tax salary reduction arrangement.

If Matt should become disabled, what would be his total yearly income tax liability?

f. Matt also receives group term life insurance (GTLI) from Rowan on a noncontributory basis. The face amount of this GTLI policy is $75,000 and the entire premium cost of $750 per year ($10 per $1000 of face amount). What impact will this have on the employees total yearly income tax liability?

2. Joe has been working for Company A for a total of four years. Company A offers Joe a 401(k) plan. At the end of the fourth year of working at Company A, Joe leaves and begins working for another employer Company B. Company B also offers a 401(k) plan.

When Joe leaves Company A, his 401(k)-account balance is $ 108,000, of which:

• Company As contribution = $60,000
• Joes contribution = $40,000
• Interest earnings = $8,000.

1. Upon leaving Company A, how much of the 401(k)-account balance can Joe take with him at a minimum? (3 points)
2. If Company A uses a three-year cliff vesting schedule, how much of the 401(k)-account balance can Joe take with him in total? (2 points)
3. If Company A uses a graded 2-6 vesting rule, how much of the 401(k)-account balance can Joe take with him in total? (3 points)