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e Study 1 Qualified Plan Protected View - Saved to this References Mailings Review View Help Internet can contain vies. Unless you need to its safe to stay in Protected View Enablediting They are married and Frank is their son. ABC sponsors a profit sharing plan with employee deferral arrangement. The employee centras information is in the chart below. Employee Age Ownership Salary Years of Service 20 20 8 12 Benjamin Sarah Chad Dave Erin Frank Ginger Haley Irish Jeni 52 49 30 32 25 22 21 6096 30% 3% 3% 0% 5 4 5330.000,00 $ 210,000.00 $ 80,000.00 $ 180,000.00 $ 140,000.00 $50,000.00 $ 40,000.00 $ 30,000.00 $ 20,000.00 $ 20,000.00 $1,100,000.00 Employer Contribution $ 33,000.00 $ 21,000.00 5 8,000.00 $ 18,000.00 $ 14,000.00 $ 5.000.00 SO $3,000.00 52.000.00 SO $ 104,000.00 Employee Deferral $18.000,00 5 18.000,00 5 10,000.00 $ 15,000.00 $ 15,000.00 $ 5.000.00 50 $ 2.000.00 51.000.00 30 $ 87,000.00 11 21 23 mon 2 09 09 0% 0% 35 19 & mon Questions: 1. What is the covered compensation amount for this plan? (3 points) 2. Define Highly Compensated Employee (2 point) 3. Who are the Highly Compensated Employees in this plan? Explain why (4 points) 4. Does your answer to the question 3 change if the company makes the 20% election? Explain why. 4 points) 5. Define Key Employees. (2 point) 6. Who are the key Employees in this plan? Explain why, (4 points) 7. Is this a Top Heavy Plan? Explain why (3 points) & Does the plan pass Safe Harbor Test? Explain why (3 points) 9. Does the plan pass the Ratio Percentage Test? points) 10. The plan uses the lonst generous graduated vesting schedule. What is vested account balances of Erin, Frank, and Irish? (6 points) H. What is the most that could be contributed to a profit sharing plan and deducted by ABC 4 points) 12. How many employees must be covered by the company" (4 points) O - Protected View - Saved to this PC- Search lings Review View Help es. Unless you need to edit it's safer to stay in Protected View Enable Editing Case 1: Qualified Plans ABC Company is a family owned business that is established by Benjamin and Sarah. They are married and Frank is their son. ABC sponsors a profit sharing plan with employee deferral arrangement. The employee census information is in the chart below. Employee Age Years of Service 20 20 Benjamin Sarah Chad Dave Erin Frank Ginger Haley Irish Jen 52 49 30 32 25 22 21 21 35 19 8 12 5 4 11 mon 23 mon 2 8 mon Ownership Salary Employer Contribution 60% $330.000.00 $ 33,000.00 30% $ 210,000.00 $ 21,000.00 5% S 80,000.00 $ 8,000.00 3% $ 180,000.00 $ 18,000.00 0% $ 140,000.00 $ 14,000.00 2% S 50,000.00 $ 5,000.00 0% $ 40,000.00 SO $ 30,000.00 $3,000.00 0% $ 20,000.00 $ 2,000.00 0% $ 20,000.00 SO $ 1,100,000.00 $ 104,000.00 Employee Deferral $ 18,000.00 $ 18,000.00 $ 10,000.00 $ 15,000.00 $ 15,000.00 $ 8,000.00 SO $ 2,000.00 $ 1,000.00 $0 $ 87,000.00 0% Questions: 1. What is the covered compensation amount for this plan? (3 points) 2. Define Highly Compensated Employee. (2 point) 3. Who are the Highly Compensated Employees in this plan? Explain why. (4 points) 4. Does your answer to the question 3 change if the company makes the 20% election Explain why. (4 points) 5 Define Key Employees. (2 point) ruses. Unless you need to edit it's safer to stay in Protected View. Enable Editing Employee Age Years or Uwnership Salary Employer Service Contribution Benjamin 52 20 60% $330.000.00 $ 33,000.00 Sarah 49 20 30% $ 210,000.00 $ 21,000.00 Chad 30 8 5% $ 80,000.00 $ 8.000.00 Dave 32 12 3% $ 180,000.00 $ 18,000.00 Erin 25 5 0% $ 140,000.00 $ 14,000.00 Frank 22 4 2% $ 50,000.00 $5,000.00 Ginger 21 11 mon 0% $ 40,000.00 SO Haley 21 0% $ 30,000.00 $ 3.000.00 Irish 35 2 0% $ 20,000.00 $ 2,000.00 Jen 19 0% $ 20,000.00 SO $ 1,100,000.00 $ 104,000.00 Questions: Employee Deferral $ 18,000.00 $ 18,000.00 $ 10,000.00 $ 15,000.00 $ 15,000.00 $ 8,000.00 $0 $ 2,000.00 $ 1,000.00 SO $ 87,000.00 23 mon 8 mon 1. What is the covered compensation amount for this plan? (3 points) 2. Define Highly Compensated Employee. (2 point) 3. Who are the Highly Compensated Employees in this plan? Explain why. (4 points) 4. Does your answer to the question 3 change if the company makes the 20% election? Explain why. (4 points) 5. Define Key Employees. (2 point) 6. Who are the Key Employees in this plan? Explain why. (4 points) 7. Is this a Top Heavy Plan? Explain why. (3 points) 8. Does the plan pass Safe Harbor Test? Explain why. (3 points) 9. Does the plan pass the Ratio Percentage Test? (3 points) 10. The plan uses the least generous graduated vesting schedule. What is vested account balances of Erin, Frank, and Irish? (6 points) 11. What is the most that could be contributed to a profit sharing plan and deducted by ABC? (4 points) 12. How many employees must be covered by the company? (4 points) 13. If it were a Defined Benefit plan? (4 points) 14. A qualified plan with deferral arrangement must satisfy one of the two other tests in addition to qualified plan coverage tests. What are those two tests? (4 points)

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