We Sale Surfboards Inc., is a web design company that operates out of Venice, California. Greg and

Wilson started We Sale Surfboards Inc., twenty years ago and it has grown to be one of the more sizable

web development firms in California. We Sale Surfboards Inc., offers a 401(k) /profit sharing plan with a

Roth account option. The plan has the following characteristics:

Eligibility: age 21 and one-year of service

Match: dollar for dollar match

Vesting: 20% per year (years 1 through 5)

Profit-sharing contribution: We Sale Surfboards Inc., generally makes a sizeable contribution,

but the percentage varies.

The plan has been amended to permit in-plan Roth rollovers.

The plan permits rollovers from other qualified plans and IRAs.

8

What is the most that We Sale Surfboards Inc., could contribute to the profit-sharing plan for the

current year assuming the salary deferrals stay constant

?

A. $136,250

B. $199,250

C. $161,750

D. $695,000

9

What is the actual deferral percentage for the highly compensated employees

?

A. 5.1%

B. 6.1%

C. 7.1%

D. 10.1%

10

What is the actual deferral percentage for the non-highly compensated employees

?

A. 2.0%

B. 4.0%

C. 2.5%

D. 6.0%

Sala Deferral wnership Age Tenure 48 49 EE# Employee $ 200,000.00$ 9,500.00 55% 30% 6% 4% 0% 21 20 15 yrs 75,000.00$ 5,000.00 10 10 1 Gre Wilson Dawn Bill Alex Grace Lisa Dann Jessica Kristen 42 58 29 53 19 25 8 months 24,000.00$ 19 5 months$ 18,000.00 $ $ 150,000.00$ 13,500.00 $85,000.00$ 5,500.00 $75,000.00$4,000.00 $60,000.00 $ 60,000.00 S 5 4 50,000.00$ 0% 10 Note: Grace is Wilson's daughter. Sala Deferral wnership Age Tenure 48 49 EE# Employee $ 200,000.00$ 9,500.00 55% 30% 6% 4% 0% 21 20 15 yrs 75,000.00$ 5,000.00 10 10 1 Gre Wilson Dawn Bill Alex Grace Lisa Dann Jessica Kristen 42 58 29 53 19 25 8 months 24,000.00$ 19 5 months$ 18,000.00 $ $ 150,000.00$ 13,500.00 $85,000.00$ 5,500.00 $75,000.00$4,000.00 $60,000.00 $ 60,000.00 S 5 4 50,000.00$ 0% 10 Note: Grace is Wilson's daughter