RPF Module 5: Pre test Correct100%

Which of the following define highly compensated employees? (Select 2 that apply) A. A person who makes $170,000 in the current year B. An officer of the company C. A 15% owner in the lookback year D. A person who makes $200,000 in the lookback year and the plan does not use the top-paid group election E. A 3% owner in the current year - ANSWER C. A 15% owner in the lookback year D. A person who makes $200,000 in the lookback year and the plan does not use the top-paid group election Which of the following define highly compensated employees? (Select 2 that apply) A. Son of a 25% owner B. Parent of an HCE and HCE has no ownership C. Spouse of a 1% owner D. Grandparent of a 100% owner E. Sibling of an owner - ANSWER A. Son of a 25% owner D. Grandparent of a 100% owner Which of the following is an HCE? A. Rudolph is the main consultant for an engineering firm. This year, he was offered the opportunity to buy into the business. He bought 10% of the business's shares before the year ended. B. Stephen graduated from law school last year. This year he began working for a law firm receiving $135,000 in compensation and is in the top-paid group. C. Zelda sells chocolate candy for a large candy manufacturing firm. Last year she was paid $100,000 including her commissions. D. Amelia received $125,000 in compensation from the worldwide construction company that employs her, but she was not in the top-paid group. - ANSWER A. Rudolph is the main consultant for an engineering firm. This year, he was offered the opportunity to buy into the business. He bought 10% of the business's shares before the year ended. Sanford calculated the ratio percentage test. He determined the number of benefiting HCEs versus the total HCEs and the number of benefiting NHCEs versus all NHCEs when he performed the test. It failed, so he computed the average benefits test. Sanford is performing which test? A. ADP test B. ACP test C. Coverage test D. Top-heavy test - ANSWER C. Coverage test The plan had the following contributions and allocations during the plan year: • Pre-tax elective contributions • After-tax employee contributions • Employer matching contributions How many minimum coverage tests must be performed? A. One B. Two C. Three D. Four - ANSWER B. Two Susan is age 43 and is employed as a full-time graphic designer for a newspaper. Her date of hire was June 15, 2017. She began deferring elective contributions immediately and has continued deferring each year into her employer's 401(k) profit sharing plan. The plan provides for matching and profit-sharing contributions after one year of service (defined as 12 months of employment with at least 1,000 hours). Susan terminated employment on December 1, 2019. Susan is considered benefiting for coverage purposes for which plan component? A. Salary deferral only B. Salary deferral and matching only C. Salary deferral and profit sharing only D. Salary deferral, matching and profit sharing - ANSWER D. Salary deferral, matching and profit sharing Deb is age 50. Her compensation in 2018 is $65,000. Her plan allows for the maximum deferral amount and permits catch-up contributions. What is the maximum Deb may defer in 2018? A. $18,500 B. $23,500 C. $24,500 D. $55,000 - ANSWER C. $24,500 Melvin's date of birth is December 1, 1975. His compensation in 2018 is $17,000. His plan allows for the maximum deferral amount and permits catch-up contributions. What is the maximum Melvin may defer in 2018? A. $17,000 B. $18,000 C. $24,000 D. $52,000 - ANSWER A. $17,000 Which of the following are considered annual additions? (Select 4 that apply) A. Designated Roth contributions B. Matching contributions C. Elective deferrals D. After-tax contributions E. Rollover contributions - ANSWER A. Designated Roth contributions B. Matching contributions C. Elective deferrals D. After-tax contributions