Question
Please answer questions 1-5 1) Pickens' Cookie Shop sponsors a qualified profit sharing plan. Of their 205 employees, 200 are nonexcludable. Of the 200 nonexcludable
Please answer questions 1-5
1) Pickens' Cookie Shop sponsors a qualified profit sharing plan. Of their 205 employees, 200 are nonexcludable. Of the 200 nonexcludable employees, 160 are NHC and 40 are HC. The plan covers 110 of the NHC and 15 of the HC. The plan does not meet the coverage requirements because only 69% of the NHC are covered by the plan.
Question 1 options:
a) True | |
b) False |
2) Since turnover is usually highest for employees in their first few years of employment and for younger employees, it makes sense from an administrative standpoint for a plan sponsor to delay these employees participation in a qualified plan.
Question 2 options:
a) True | |
b) False |
3) Which of the following statements are reasons to delay eligibility of employees to participate in a retirement plan?
1. Employees dont start earning benefits until they become plan participants (except in defined benefit plans, which may count prior service). 2. ERISA laws do not take place until the employee enrolls in the retirement plan. Delaying entrance into the plan allows company's to lower adminstrative costs related to ERISA compliance.
Question 3 options:
a) 1 only | |
b) 2 only | |
c) Both 1 and 2 | |
d) Neither 1 nor 2 |
4) Gruden Coaching School sponsors a 401(k) profit sharing plan. In the current year, the company places 25% of each employees earned income into the profit sharing plan. The ADP of the 401(k) plan for the NHC was 3.5%. If Sam, age 57, earns $100,000 and is a 6% owner, what is the maximum amount that he may defer into the 401(k) plan for 2018?
Question 4 options:
a) $5,500. | |
b) $6,000 | |
c) $11,500. | |
d) $24,500 |
5)Which of the following people is considered highly compensated for 2018?
Question 5 options:
a) Doug, a 3.5% owner who earns $110,500 per year. | |
b) Sarah, who earned $88,000 last year and is the 18th highest paid employee of 100 employees. | |
c) Jordan who owns 20% owner and earns $24,000 per year. | |
d) Both Sarah and Jordan (from above answers) are considered highly compensated. |
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