Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The XYZ Corporation employs salaried and hourly employees. It has no union employees. It maintains two qualified plans - a defined benefit plan for the
The XYZ Corporation employs salaried and hourly employees. It has no union employees. It maintains two qualified plans - a defined benefit plan for the salaried employees and a profit sharing plan for the hourly employees. The salaried plan use a minimum age of 21, a one-year wait, and salaried status for eligibility purposes, whereas the hourly plan uses only a minimum age of 21, a one-year wait, and hourly status for eligibility purposes. Based on the statistics for the current year: The Test Group consists of 140 employees, of which 135 are NHCEs and 5 are HCEs The salaried plan covers 65 employees, of which 60 are NHCEs and 5 are HCEs The hourly plan covers 75, of which 75 are NHCEs and 0 are HCEs 4) Assuming the salaried plan is a defined benefit plan, does it satisfy the additional coverage test of IRC 401(a)(26): a. The salaried plan meets this additional coverage test as it covers at least 50 employees. b. The salaried plan fails to meet this additional coverage test which requires at least 70 employees to be benefiting. c. Neither of the above answers is correct
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started