Complete the following review questions:

• Questions 1-14 from attached file.

Complete the following application questions:

Answer each of the following questions and provide your rational for your choice for each one. You will not receive full credit unless you provide your explanation.

• Which of the following people would be considered a highly compensated employee for 2019?
  • Amy, a 2% owner whose salary last year was $165,000
  • Red, a 6% owner whose salary was $23,500 for the last five years.
  • Reese, an officer, who earned $115,000 last year and is the sixth highest paid employee of 96 employees.
  • Hank, a 0.5% owner who earned $136,000 last year and is in the top 20% of paid employees.
• Acme Inc. has 200 total employees, 150 of which are nonexcludable employees. Ten employees are highly compensated. Seven of the 10 highly compensated and 100 of the 140 nonhighly compensated employees are covered under Acme’s qualified plan. The average accrued benefit for the highly compensated is 3% and the average accrued benefit for the nonhighly compensated is 1.5%. Which of the following statements is true regarding coverage?

• The plan passes the ratio percentage test.
• The plan passes the average benefits test.
  • 1 only
  • 2 only
  • Both 1 and 2
  • Neither 1 nor 2

• Axe Company sponsors a 401(k) profit sharing plan with no employer match, but the company did make noncontributory employer contributions because the plan was top-heavy. Jack quit today after six years working for Axe and has come to you to determine how much of his retirement balance he can take with him. The plan uses the least generous graduated vesting schedule available. What is Jack’s vested account balance if he has been a participating member for 57 months?
• ABC Inc. sponsors a defined contribution plan. Seth, age 39, has compensation of $150,000 for the year. ABC has made a $20,000 profit sharing plan contribution for Seth and $5,000 of plan forfeitures were allocated to Seth’s profit sharing plan during the year. How much can Seth defer into his CODA plan (401(k) plan) for 2019?
  • $19,000
  • $25,000
  • $31,000
  • $36,000