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What is the most that Bubbles could contribute to the profit-sharing plan for the current year assuming this salary deferral stay constant? What is the

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  1. What is the most that Bubbles could contribute to the profit-sharing plan for the current year assuming this salary deferral stay constant?

  1. What is the actual deferral percentage for the highly compensated employees?

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

  1. Does the plan pass the ADP test? Why or why not and what can the company do if the plan does not pass the test?

ITEM SET 6: QUALIFIED PLAN RULES Bubbles LLC is a web design company that operates out of Boulder, Colorado. Mark and Jeff started Bubbles twenty years ago and it has grown to be one of the more sizable web development firms in Colorado. Bubbles 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) Highly compensated definition: uses top 20% election Profit-sharing contribution: Bubbles 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. EE# Employee Ownership Age Tenure Salary Deferral 1 Mark 60% 48 20 Years $200,000 $10,000 2 Jeff 30% 49 20 Years $150,000 $15,000 3 Chad 6% 33 15 Years $75,000 $5,250 4 Josh 4% 42 10 Years $85,000 $5,100 5 Alex 0% 8 Years $60,000 $0 6 Shay 0% 6 Years $75,000 $4,500 7 Lisa 0% 53 4 Years $50,000 $0 8 Alison 0% 2 Years $60,000 $0 9 Chung 0% 25 8 Months $24,000 $0 10 Chau 0% 19 6 Months $18,000 $0 Note: Shay is Jeff's daughter. She graduated from the art institute five years ago. 58 29 19 1. Who is highly compensated? ITEM SET 6: QUALIFIED PLAN RULES Bubbles LLC is a web design company that operates out of Boulder, Colorado. Mark and Jeff started Bubbles twenty years ago and it has grown to be one of the more sizable web development firms in Colorado. Bubbles 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) Highly compensated definition: uses top 20% election Profit-sharing contribution: Bubbles 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. EE# Employee Ownership Age Tenure Salary Deferral 1 Mark 60% 48 20 Years $200,000 $10,000 2 Jeff 30% 49 20 Years $150,000 $15,000 3 Chad 6% 33 15 Years $75,000 $5,250 4 Josh 4% 42 10 Years $85,000 $5,100 5 Alex 0% 8 Years $60,000 $0 6 Shay 0% 6 Years $75,000 $4,500 7 Lisa 0% 53 4 Years $50,000 $0 8 Alison 0% 2 Years $60,000 $0 9 Chung 0% 25 8 Months $24,000 $0 10 Chau 0% 19 6 Months $18,000 $0 Note: Shay is Jeff's daughter. She graduated from the art institute five years ago. 58 29 19 1. Who is highly compensated

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