RMI 4135- final exam

charles, a single 29 year old, deferred 2% of his salary, or $2,000, into a 401(k) plan sponsored by his employer during 2020. what is the maximum deductible ira contribution charles can make during 2020?

$0

robert, single and age 54, is a participant of his employer's qualified profit sharing plan. for the current year he receive a forfeiture allocation of $25, but the employer did not make any other contribution for the year. robert would like to make a deductible ira contribution. if roberts agi is $79,000 (all comprised of w-2 earnings and portfolio income), what is the maximum deduction ira contribution robert can make for 2020?

$0

sodium services, inc. (ss) sponsors a simple for its employees with a 100% match up to 3% of compensation. mary, age 42, has been as ssi employee for 14 years. in the current year, mary earns $35,000 and defers $10,000 to the simple plan. what is the maximums matching contribution to marys simple from ssi?

$1,050

an april 30, janet, age 42, received a distribution from her qualified plan of $150,000. she had an adjusted basis in the plan of $500,000 and the fair market value of the account as of april 30 was $625,000. calculate the taxable amount of the distribution and any applicable penalty

$30,000 taxable, $3,000 tax penalty

clarence hardy is an employee at the drake candy corporation, an s corporation. clarence and other employees are covered under a disability income plan that will pay him 50% of his $96,000 salary if he becomes disabled. the company adds the pro rata cost of the plan to each employee's w-2. clarence is in the 25% income tax bracket. what is the amount of monthly disability benefits clarence will receive after tax if he remains in the same tax bracket when disabled?

$4,000

marisol was granted 100 nqsos five years ago. at the time of the option grant, the value of the underlying stock was $100 and the exercise price was equal to $100. if marisol exercises the options on august 22 of this year when the stock is valued at $145, what are the tax consequences (per share) to marisol from exercising the options?

$45 of w-2 income

Judy is covered by a $200,000 group-term life insurance policy of which her daughter is the sole beneficiary. judy's employer pays the entire premium for the policy, for which the uniform annual premium is $0.75 per $1,000 per month of coverage. how much, if any, of the cost of the group-term life insurance is excluded from judy's gross income on an annual basis?

$450

vance has a vested account balance in his employer sponsored qualified profit sharing plan of $40,000. he has two years of service with his employer and the plan follows the least generous graduated vesting schedule permitted for a profit-sharing plan under ppa 2006. if vance has an outstanding loan balance within the prior 12 months of $15,000, what is the maximum loan vance could take from this qualified plan, assuming the plan permitted loans?

$5,000

RCM incorporated sponsors a qualified plan that requires employees to meet one year of service and to be 21 years old before being considered eligible to enter the plan. which of the following employees are not eligible? 1. donald, age 18, who has worked full-time with the company for 3 years 2. rachel, age 22, who has worked full-time with the company for 6 months 3. randy, age 62, who has worked 500 hours per year for the past 6 years 4. theodore, age 35, who has worked full-time with the company for 10 years

1, 2, and 3

which of the following expenses qualify for adoption assistance for adopting a child without special needs? 1. attorney's fee 2. court costs 3. travel to a foreign country to get the child 4. adoption fee for a spouse's child

1, 2, and 3

which of the following statements concerning the typical VEBA is (are) correct? 1. membership is voluntary 2. discrimination in favor of highly-compensated employees is not permitted 3. employees may receive vacation, child card, legal services, education and job training benefits

1, 2, and 3

which of the following vesting schedules may a non-top-heavy profit-sharing plan use? 1. 2- to 6-year graduated 2. 3 year cliff 3. 1- to 4- year graduated 4. 3- to 7- year cliff

1, 2, and 3

marguerite received nonqualified stock options (nqsos) with an exercis price equal to the fmv at the date of the grant of $22. marguerite exercises the options 3 years after the grant date when the fmv of the stock was $30. marguerite then sells the stock 3 years after exercising for $35. which of the following statements are true? 1. at the date of the grant, marguerite will have ordinary income of $22 2. at the date of exercise, marguerite will have w-2 income at $8 3. at the date of sale, marguerite will have long term capital gain of $5 4. marguerite's employer will have a deductible expense in relation to this option of $22

2 and 3

which of the following statements concerning the income tax treatment of some employee benefits is (are) correct? 1. health insurance premiums paid by an employer are deductible to employees 2. health insurance premiums paid by the self-employed are 100% deductible above-the-line 3. health insurance premiums paid by an employer are a miscellaneous deduction for a 5% s corporation shareholder 4. insurance premiums paid by an employer on a group life policy are taxable income to employees for coverage over $50,000

2 and 4

what is the first year in which a single taxpayer, age 48 in 2020, could receive a qualified distribution from a roth ira, if he made a $5,000 contribution to the roth ira on april 1, 2020, for the tax year 2019?

2024

which of the following statment(s) regardign 403(b) plans is true? 1. assets within a 403(b) plan may be invested in individual securities 2. a 403(b) plan usually provides a 3- to 7-year graduated vesting schedule 3. a 403(b) plan must pass the acp test if it is an erisa plan 4. in certain situations, a participant of a 403(b) plan can defer an additional $15,000 as a catch up to the 403(b) plan

3 and 4

which of the following is an example of a qualified retirement plan?

401(k) plan

which of the following is not a qualified retirement plan? -ESOP -401(k) plan -403(b) -target benefit plan

403(b) plan

packlite company has a defined benefit plan with 250 employees, of which 200 are nonexcludable employees (40 HC and 160 NHC). they are unsure if they are meeting all of their testing requirements. what is the minimum number of total employees that must be covered on a daily basis to conform with the requirements set forth in the IRC?

50

jon, age 48, earns $65,000 per year from his employer. jon saves $15,000 per year for retirement and pays $12,000 per year for his home mortgage. given this information and considering that jon will have eliminated his mortgage debt before retirement, what is jon's expected wage replacement ratio during retirement?

50.81%

raymond is turning 65 years of age and has been receiving social security benefits. which of the following statements concerning his eligibility for medicare benefits is correct?

raymond will be enrolled automatically in parts a and b

Carla would like to determine her financial needs during retirement. all of the following are costs she might eliminate in her retirement needs calculation except:

the $1,500 mortgage payment she makes that is scheduled to end 2 years into retirement

which of the following has no bearing on whether a 403(b) pan is subject to erisa rules?

the plan has less than 100 employees

wendy is working with her financial planner to update her retirement plan. she would like to understand more about when she will become vested and when and in what form benefits are paid. which of the following is the best resource for wendy to verify this information?

the summary plan description

why don't retirees mind being called seniors?

the term comes with a 10 percent discount

glen is 85 years old and is covered by medicare parts a and b. wile walking down the wooden stairs at his home last week, glen's stylish italian loafer slipped out from under him and he fell and broke his hip in three places. all of the following medical expenses will be covered under part a of medicare EXCEPT:

follow up visits to his primary care physician after glen's recovery

stretch iras do which of the following?

help extend the payout period for beneficiaries

the following statements concerning retirement plan service requirements for qualified plans are correct EXCEPT:

if an employee hired on october 5, 20X2 has worked at least 1,000 hours or more by October 4, 20X3, has has acquired a year of service the day after he worked his 1,000th hour

mike was awarded 1,000 shares of restricted stock of b corp at a time when the stock price was $14. assume mike properly makes an 83(b) election at the date of the award. the stock vests 2 years later at a price of $12 and mike sells it then. what are mike's tax consequences in the year he makes the 83(b) election?

mike has w-2 income of $14,000

robbie is the owner of ss automotive and he would like to establish a qualified pension plan. robbie would like most of the plan's current contributions to be allocated to his account. he does not want to permit loans and he does not want ss automotive to bear the investment risk of the plan's assets. robbie is 32 and earns $70,000 per year. his employees are 25, 29, and 48 and they each ear $25,000 per year. which of the following qualified pensions plans would you recommend that robbie establish?

money purchase pension plan

which of the following statements concerning accrued benefits in qualified plans is (are) correct? 1. in a defined benefit plan, the participant's accrued benefit at any point is the participant's present account balance. the accrual for the specified year is the amount contributed to the plan on the employee's behalf for that year 2. in a defined contribution plan, the accrued benefit is the benefit earned to date, using current salary and years of service. the accrued benefit earned for the year is the additional benefit that has been earned based upon the current year's salary and service

neither 1 nor 2

going higher construction sponsors a 401(k) profit sharing plan. in the current year, going higher construction contributed 25% of each employees' compensation to the profit-sharing plan. the adp of the 401(k) plan for the NHC was 3.5%. if bob, age 57, earns $100,000 and is a 6% owner, what is the maximum amount that he may contribute into the 401(k) plan for 2020?

$12,000

chuck is an employee of federated corporation, with an annual salary of $60,000. chuck's employer provides $90,000 of group term life insurance. chuck is required to contribute monthly $0.15 per $1,000 of coverage. the irs uniform premium table shows $0.60 as the monthly cost per $1,000 for the coverage. how much is included in chuck's annual gross income for the benefits received from his employer's group life insurance coverage?

$126

maxine, age 35, earns $200,000 annually from abc incorporated. abc sponsors a simple and matches all employee deferrals 100% up to a 3% contribution. what is the maximum employee deferral contribution to maxines simple account for 2020?

$13,500

an individual has determined utilizing the annuity method of capital needs analysis that he needs $1,045,656 at the beginning of his retirement to meet his retirement life expectancy goals. if this individual would like to be more conservative in his retirement planning forecast and maintain his capital balance throughout his retirement life expectancy of 32 years, given an expected earnings rate of 6%, and an inflation rate of 3% during the period, how much more would he needs to have at the beginning of his retirement?

$162,032

henry hobbs, age 42, has compensation of $72,000. the normal retirement age for his 457(b) plan is age 62. henry has unused deferrals totaling $21,000 as of the beginning of the year. how much can henry defer into his 457(b) public plan for 2020?

$19,500

jordan wants to retire in 15 years when he turns 65. jordan wants to have enough money to replace 75% of his current income less what he expects to receive from social security at the beginning of each year. he expects to receive $20,000 per year from social security in today's dollars. jordan is conservative and wants to assume a 6% annual investment rate of return and assume the inflation will be 4% per year. based on his family history, jordan expects that he will live to be 95 years old. if jordan currently earns $100,000 per year and he expects his raises to equal the inflation rate, approximately how much does he need at retirement to fulfill his retirement goals?

$2,285,172

eric, age 53, had the following items of income: investment returns as a limited partner in a partnership of $1,200 unemployment income of $350 income from a law practice of $600 deferred compensation from a former employer of $14,000 alimony of $750(divorce agreement was signed in 2016) wages of $1,000 what is the maximum contribution eric can make to an ira in 2020?

$2,350

jennifer, age 54, earns $125,000 annually from abc incorporated. abc sponsors a simple and matches all employee deferrals 100% up to a 3% contribution. assuming jennifer defers the maximum to her simple, what is the total contribution to the account in 2020 including both employee and employer contributions?

$20,250

jared, age 54, earns $300,000 per year and is a participant in his employer's 401(k) plan. ignoring the adp test requirements, what is the maximum amount that jared can contribute under the 401(k) plan in 2020?

$26,000

carrie, age 55, is an employee of rocket, inc. (rocket). rocket sponsors a sep ira and would like to contribute the maximum amount to carrie's account for the plan year. if carrie earns $14,000 per year from rocket, what is the maximum contribution rocket can make on her behalf to the sep ira?

$3,500

one of the disadvantages of an esop is that the stock is an undiversified investment portfolio. which of the following statements is correct about esops? 1. an employee, age 55 or older, who has completed 10 years of participation in an esop may require that 25% of the total number of shares of employer stock contributed to the account can be diversified 2. an employee who receives corporate stock as a distribution from an esop may enjoy net unrealized appreciation treatment at the time of distribution

1 and 2

which of the following qualified plan distributions are subject to a 10% early withdrawal penalty? 1. carolyn, age 56, currently employed by ubeit corporation, takes a $125,000 distribution from the ubeit 401(k) plan 2. brad, age 60, takes a $1,000,000 distribution from his employer/s profit-sharing plan. ten days after receiving the $800,000 check (reduced for 20% withholding), brad deposited the $800,000 into a new ira account 3. tara, age 22, withdraws $2,000 of her contributions from her 401(k)

1 and 3

which of the following statements regarding 457 plans is (are) true? 1. an individual who defers $19,500 to his 403(b) plan during 2020 can also defer $19,500 to a 457 plan during 2020 (salary and plan permitting) 2. a 457 plan allows an executive of a tax-exempt entity to defer compensation into an erisa protected trust 3. in the final three years before normal retirement age, a participant of a government sponsored 457 plan may be able to defer $39,000(2020) for the plan year

1 and 3

mitchell llc is a manufacturing company based in boulder, colorado. mitchell manufacturers car stereo equipment for high-end performance cars. mitchell provides the following fringe benefits to employees: 1. mitchell made an agreement with the n-shape athletic facility in the same building as mithcell's offices. the monthly fee is generally $100 but is paid for by mitchell for any employees who are interested 2. mitchell allows employees to purchase equipment for themselves at a 40% discount, even though the cot of goods sold is 45%. which of these employee fringe benefits will be taxable to employees?

1 only

which of the following statements concerning tax considerations of nonqualified retirement plans is (are) correct? 1. under irs regulations an amount becomes currently taxable to an executive even before it is actually received if it has been constructively received 2. distributions from nonqualified retirement plans are generally subject to payroll taxes

1 only

which of the following vesting schedules may a top heavy qualified profit sharing plan use?

1 to 5 year graduated

which of the following statements concerning an employer's responsibilities associated with a qualified retirement plan is (are) correct?

both a and b

thelma and louise are equal oqners of a business valued at $400,000. they adopted a cross-purchase buy-sell plan over 10 years ago, and now thelma wants to leave the business to do more traveling. thelma wants louise to buy the life insurance policy thelma owns on louise. which of the following statements concerning a sale of the policy is correct?

if louise buys the policy, the policy proceeds will be fully excluded from income

many insurance companies in their disability income policies now use a split definition of disability. which of the following is how this split definition is generally stated?

inability to perform his or her own occupation followed by inability to perform any occupation for which reasonably suited

jennifer recieved 1,000 sars at $18, the current trading price of clippers, inc., her employer. if jennifer exercsies the sars three years after the grant when clipper's stock is $20 per share, which of the following statements is true?

jennifer will have w-2 income equal to $2,000

martin (age 63) has enjoyed abundance during his lifetime and decided to share that abundance with three wives. his first marriage to karen (currently age 65, who has never remarried) last 25 years. two years after divorcing karen, martin married christine(currently age 65), but that marriage ended three years later when christine fell madly in love with, and married jean(age 58 this year), have married for 8 years. which of the following statements concerning spousal benefits under social security is correct?

karen can collect a spousal benefit from martin's social security record

which of the following employee benefits may NOT be offered through an employer's cafeteria plan as a tax-free benefit?

long-term care insurance

which of the following qualified plan distributions will be subjected to a 10% early withdrawal penalty?

lonnie, age, 35, takes a $100,000 distribution from his profit sharing plan to pay for his son's college tuition

of the following expenditures, which is most likely to increase during retirement?

medical expenses

in a properly drawn business buy-sell agreement funded by life insurance for a six-person partnership: 1. the cross-purchase approach will be found to be more efficient than the entity approach 2. with a cross-purchase agreement, the surviving partners are given the option to buy the interest of a deceased partner

neither 1 nor 2

which of the following statements regarding a sep is true? 1. the maximum contribution to a sep is the lesser of 100% of compensation or $57,000 for 2020 2. a sep is appropriate for an employer with many part-time employees who want to limit coverage under the sep 3. contributions to a sep must vest at least as rapidly as a 5-year cliff vesting schedule or 2 to 6 year graduated vesting schedule 4. if a partnership makes a flat % contribution equal to 25% of all employees' salary for the year to a sep, a partner earnign $100,000 during the year would receive a $25,000 contribution

none of the statements are true

oliver is a 45-year old executive who earns $375,000 from his job at acme arrows (aa) and contributes the maximum amount to the 401(k) plan. he wants to make a contribution to a roth ira for the current year. assume that oliver has a traditional ira with a balance of $10,000 that was funded entirely with pre-tax contributions. which of the following is correct for 2020?

oliver could execute the backdoor roth strategy but would have to recognize approximately $3,750 for income tax purposes if he contributed $6,000 to a traditional ira and then converted that amount to a roth

thomas, age 55 and the owner of a computer repaid shop, has come to you to establish a qualified plan. the repair shop, which employs mostly young employees, has had steady cash flows over the past few years, but thomas foresees shaky cash flows in the future as new computer prices decline. thomas would like to allocate as much of the plan contributions to himself as possible. he is the only employee whose compensation is in excess of $100,000. which of the following qualified plans would you advicse thomas to establish?

profit sharing plan

robin began taking required minimum distributions from her profit sharing plan in 2017. in 2019, robin died after suffering a heart attack. she did not have a named beneficiary for her profit sharing plan. which of the following statements is false?

robin's estate must take a distribution of the profit-sharing plan account balance by the end of the fifth year after robin's death

which of the following statements regarding traditional and roth iras is not true?

roth ira and traditional ira owners must take required distributions from their ira after the attainment of age 70 1/2 (or age 72 if 70 1/2 is attained after december 31,2019)

distributions prior to age 59 1/2 are generally subject to early withdrawal penalty. however, there is an exception for substantially equal periodic payments. which of the following is correct?

substantially equal periodic payments continue for at least five years

rank-and-file employees who are beneficiaries of an esop are protected with the put option because:

the employee may force the corporation to buy back the stock at a fair market value

in key person life insurance:

the employee pays the cost

under which of the following circumstances is an employer not required to extend medical plan coverage to an employee or his or her dependents under cobra?

the employee was terminated for gross misconduct

which of the following are correct for a leveraged esop, one in which the employer stock is obtained by virtue of a loan?

the employer is permitted to deduct all interest paid on the esop loan

if the cost of the first $50,000 of employer-provided group term life insurance is to be excluded from the gross income of all participating employees, which one of the following conditions must the plan meet?

the plan must not discriminate in favor of key employees as to eligibility or benefits

jerry, who was age 56, had just been called into the presidents' office at napa sunrise, inc. on november 12, 2019 and learned that his position has been eliminated in the recent reorganization. unfortunately, he was devastated and was hit by a city bus while crossing the street in front of his office. he named is son, tom, as his beneficiary. tom has just turned 20 years old and is in college at loyola university, in new orleans. jerry's account balance at the time of his death was $500,000. which of the following is not correct?

tom's only choice for complying with the minimum distribution rules is to take out the entire balance over a five-year period

a plan sponsor has the right to terminate a qualified retirement plan when the plan sponsor no longer has the funds available to continue funding the plan at a reasonable level. true or false

true

an individually designed qualified plan will generally cost more for a company to establish than a prototype plan. true or false

true

several years ago, rustin retired from fox, inc., in a national plastics supplier. when rustin retired, he had 1,000 shares of fox, inc. stock in his stock bonus plan. fox, inc. took deductions equal to $20 per share for the contributions made on rustins behalf. at retirement, rustin took a lump-sum distribution of the employer stock. the fair market value of the stock at distribution was $35 per share. on july 15th of this year, rustin sold the stock for $40 per share. which of the following will rustin report on his tax return at the date he sells the fox, inc. stock?

$0 ordinary income, $0 of short-term capital gain, $20,000 of long-term capital gain

on january 1 of last year, randy was awarded 15,000 isos at an exercise price of $3 per share when the fair market value of the stock was equal to $3. on april 17 of this year, randy exercised all of his isos when the fair market value of the stock was $5 per share. at the date of exercise, what are the tax consequences to randy?

$0 w-2 income, $30,000 amt adjustment

bob wants to retire in 15 years when he turns 62. bob wants enough money to replace 75% of his current income less what he expects to receive from social security at the beginning of each year. he expects to receive $25,714 per year from social security in today's dollars at full retirement age of 67. however, he will take social security early at age 62, when he retires. bob is aggressive and wants to assume an 8% annual investment rate of return and that inflation will be 3% per year. based on his family history, bob expects that he will live 30 years in retirement(age 92). if bob currently earns $80,000 per year and he expects his raises to equal the inflation rate, how much does he need at retirement to fulfill his retirement goals?

$1,072,458

monarch machines sponsors a 16.5% money purchase pension plan and 401(k) profit sharing plan in which the employees are permitted to defer up to 75% of their compensation. monarch machines matches employee deferral contributions 100% up to 6% of deferred compensation. if james, age 31, is a highly compensated employee who earns $220,000, what is the maximum he could receive as an employer match from monarch if the adp of the nhc is 4% in 2020?

$10,350

bob broke his leg skiing earlier this year. bob collected $10,000 from his short term disability plan paid for solely by his employer. how much does bob have to include in his gross income?

$10,000

at the age of 57, james converted his traditional ira, valued at $45,000, to a roth ira. at age 60, james took a distribution from this roth ira of $100,000 to buy a new car for his daughter for college. which of the following statements is true with regards to the distribution from the roth ira?

$55,000 will be subject to ordinary income tax

jason, age 52, is a highly compensated employee who earns $300,000 per year is a participant in his employers 401(k). his employer also made a 20% profit sharing plan contribution during the year. ignoring the adp test requirements, what is the maximum amount that jason can defer under the 401(k) during 2020?

$6,5000

corey, age 54 and single, has compensation this year of $85,000. his employer does not sponsor a qualified plan, so corey would like to contribute to a roth ira. what is corey's maximum contribution for this year to the roth ira?

$7,000

james is employed by a large corporation with 400 employees. the corporation provides its employees with a no-cost gym membership at the local public ymcas. the cost of membership is $60/month which of completely paid for by james' employer for all employees. how much, if any, must james include in his yearly gross income related to this fringe benefit?

$720

andy is currently age 65 and about to retire. he had accumulated $1,539,500 in his 401(k) and would like to know what amount he could withdraw at the beginning of the first year of retirement if the purchasing power of the withdrawals will be maintained during retirement. andy expects to continue to earn 6% on his investments, assumed inflation will be 3%, and expects to live to age 85. which of the following is the amount of the first year distribution?

$99,756

retirement plan participants who wish to take advantage of a qualified plan's loan provision must agree to the following restrictions on the amount of the loan and how it is repaid:

both a and b

if ice electronics, inc. (ice) established a profit sharing plan for the current year, ice is required to make contributions to the profit sharing plan for the current plan

false- contributions simply need to recurring and substantial

which of the following statements concerning rabbi trust is (are) correct?

a rabbi trust is a trust established and sometimes funded by the employer that is subject to the claims of the employer's creditors, but any funds in the trust cannot generally be used by or revert back to the employer

which of the following statements are reasons to delay eligibility of employees to participate in a retirement plan? 1. employees do not start earning benefits until they become plan participants (except in defined benefit plans, which may count prior service) 2. since turnover is generally highest for employees in their first few years of employment and for younger employees, it makes sense from an administrative stand point to delay their eligibility

both 1 and 2

for persons with substantial income in addition to social security benefits, the beneficiary's modified adjusted gross income(MAGI) includes which of the following?

all of the above

which of the following factors may affect a person's individual retirement planning? 1. work life expectancy 2. retirement life expectancy 3. inflation 4. savings rate

all of the above

which of the following situations might convince an employer to choose a nonqualified retirement plan over a qualified profit-sharing plan?

all of the above

allison quinn, age 43, is an employee is BizzCo Corporation and earns an annual salary of $95,000. allison has recently been informed that the company is implementing a group term life insurance plan and will pay the premium for an amount of coverage equal to her salary. what are the tax implications of this benefit for allison?

allison will pay tax on an additional $54.00 of income

which of the following statements regarding an age based profit sharing plan is correct?

an age-based profit sharing plan provides greater benefits to the older plan participants

which of the following statements concerning stock bonus plans and esops is (are) true? 1. they both give employees a stake in the company through stock ownership and allow taxes to be delayed on stock appreciation gains 2. they both limit availability of retirement funds to employees if an employer's stock falls drastically in value and create an administrative and cash-flow problem for employers by requiring them to offer a repurchase option (a.k.a put option) if their stock is not readily tradable on an established market

both 1 and 2

xyz has a noncontributory qualified profit-sharing plan with 310 employees in total, 180 who are nonexcludable (40 HC and 140 NHC). the plan covers 72 NHC and 29 HC. the NHC receive an average of 4.5% benefit and the HC receive 6.5%. which of the following statements is(are) correct? 1. the xyz company plan meets the ratio percentage test 2. the xyz company plan fails the average benefits test 3. the plan must and does meet the adp test

both 1 and 2

bobby own advertising solutions, inc. (asi) and sells 100% of the company stock on july 1 of the current year to an esop for $3,000,000. bobby had an adjusted basis in the asi stock of $450,000. if bobby reinvests in a qualified replacement securities before the end of the current year, which of the following statements is true?

bobby will not recognize long-term capital gain or ordinary income in the current year

a non-safe harbor 401(k) plan allows plan participants the participants the opportunity to defer taxation on a portion of regular salary simply by electing to have such amounts contributed to the plan instead of receiving them in cash. which of the following statements is/are rules that apply to 401(k) salary deferrals? 1. salary deferral into the 401(k) plan are limited to $19,500 for individuals younger than 50 for 2020 2. a non-discrimination test called the actual deferral percentage test applies to salary deferral amounts

both 1 and 2

which of the following are characteristics of a simple?

contributions to a simple are 100% vested at all times

which of the following situations would create an inclusion in an employee's gross income?

eric, who is an active duty marine, moved from houston to new orleans as was required by the marines. his expenses for the movie included $400 of truck rental costs, $100 of lodging and $200 of pre-move house hunting expenses. eric's employer reimbursed him $600

all 401(k) plans must pass the adp test

false

desk town, inc. has employees located in offices and stores in houston, philadelphia, and buffalo. desk town would like to establish a qualified retirement plan for its employees in the houston and philadelphia offices only. it has already completed initial testing and has determined that its plan will meet the coverage tests while excluding buffalo because none of the employees in the buffalo office meet the eligibility requirements of the plan. however, desk town must still notify the employees located in the desk town buffalo offices and stores of its establishment of the qualified retirement plan. true or false

false

kdt, inc. would like to establish a qualified retirement plan to benefit tis 95 full-time employees. (kdt does not have any other employees.). kdt would like to fund the plan with cash each year and does not want to make contributions to plan in years that the company does not have a profit. given this information, and considering the employee census data, the best qualified retirement plan for kdt would be cash balance pension plan. true or flase

false