70.2K

Verified Solution

Link Copied!

1. The following is list of ABC Corps eligible employees. What would the profit-sharing contributions be for the following types of profit-sharing plans (round to nearest dollar)?

Standard Allocation 10% Contribution

Employee	Age	Salary	Contribution	% of Salary	% of Total Contribution
A (Owner)	55	$210,000
B	45	$90,000
C	40	$65,000
D	22	$35,000
		$400,000

Permitted Disparity 10% Base Rate Contribution (assume maximum excess rate possible)

Employee	Age	Salary	Base Salary	Excess Salary	Base Cont	Excess Cont	Total Cont	% of Salary	% Total Contrib.
A (Owner)	55	$210,000
B	45	$90,000
C	40	$65,000
D	22	$35,000
		$400,000

Age-Weighted Assumed 8.5% ROR, NRA = 65, Total Contribution = Standard Allocation Amount $40k

Employee	Age	Salary	PV of $1 (8.5%)	Allocation Factor	% of Total Cont.	Dollar Contrib.	% of Salary
A (Owner)	55	$210,000
B	45	$90,000
C	40	$65,000
D	22	$35,000
		$400,000

Answer & Explanation Solved by verified expert

See Answer