Mike and Maria Roman Case Study

Review the case material provided in Chapter 15 of your textbook. These include personal background information (including client objectives), external information, internal information, pre-construction financial statements, and case assumptions you are to make. Take your time to thoroughly review these documents and make yourself familiar with the clients goals and objectives; then answer the following questions the client has for you.

*Note: some of these questions may require you to go through your previous work and the textbook to provide sufficient answers

Open Questions:

If Mike were to set up a qualified plan, then who would be eligible for the plan?

How much is Mikes pension worth in todays dollars?

How much is Mike and Marias Social Security benefits worth today?

Mike wants to set aside $75,000 for Michaels education. If he set aside all of his other cash and investable assets for the purpose of retirement, approximately how much would he need to save every year to fund his retirement?

How much is Mikes self-employment tax for 2021?

How much could Mike contribute for himself in 2021 if he set up a SEP with a 25% contribution?

What risks does Mike have that need to be considered?

Based on how much Mike needs to save and what you have gathered from the case, what type of retirement plan would you recommend, if any at all? Justify your answer.

Assume Mickey dies in June this year and Mike inherits his dads Exxon stock, which is worth $350,000 at the time of his death. If Mike sells the stock before the end of the year for $400,000, then what are the tax consequences?

If Michael were to inherit his granddads IRA in 2021, how would he comply with the minimum distribution rules? Would it be safe from creditors?

Multiple Choice Questions (Show your work/reasoning):

If Mike were to set up a SIMPLE IRA for RBI, how much could he defer in terms of the deferral contribution? a. $5,145. b. $13,500. c. $16,500. d. $19,500

If Mike were to set up a SIMPLE IRA, could his dad participate since is over 70 years old? a. No. Mickey is too old to contribute to a SIMPLE IRA. b. No. Mickey would not be eligible to contribute to a SIMPLE IRA. c. Yes. He would be able to participate since he earns more than the minimum requirement. d. Yes. He is able to participate because he is under the age of 85

What is the best retirement plan to set up if Mike wants to give his coaches and himself a way to defer income into the plan with minimal contributions by RBI and minimal hassles in setting up and administering the plan? a. SIMPLE plan. b. 401(k) plan. c. Profit-sharing plan. d. SEP.

What is the best retirement plan for Mike to set up if he wants to be able to exclude as many as many coaches as possible? a. SEP. b. SIMPLE. c. 401(k) plan. d. DB(k) plan.