Question
The following is list of ABC Corps eligible employees. What would the profit-sharing contributions be for the following types of profit-sharing plans (round to nearest
- The following is list of ABC Corps eligible employees. What would the profit-sharing contributions be for the following types of profit-sharing plans (round to nearest dollar)?
Standard Allocation 10% Contribution
Employee | Age | Salary | Contribution | % of Salary | % of Total Contribution |
A (Owner) | 55 | $210,000 |
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B | 45 | $90,000 |
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C | 40 | $65,000 |
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D | 22 | $35,000 |
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| $400,000 |
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Permitted Disparity 10% Base Rate Contribution (assume maximum excess rate possible)
Employee | Age | Salary | Base Salary | Excess Salary | Base Cont | Excess Cont | Total Cont | % of Salary | % Total Contrib. |
A (Owner) | 55 | $210,000 |
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B | 45 | $90,000 |
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C | 40 | $65,000 |
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D | 22 | $35,000 |
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| $400,000 |
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Age-Weighted Assumed 8.5% ROR, NRA = 65, Total Contribution = Standard Allocation Amount $40k
Employee | Age | Salary | PV of $1 (8.5%) | Allocation Factor | % of Total Cont. | Dollar Contrib. | % of Salary |
A (Owner) | 55 | $210,000 |
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B | 45 | $90,000 |
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C | 40 | $65,000 |
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D | 22 | $35,000 |
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| $400,000 |
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