GF 550 Final Exam with Correct Answers (Verified) Assist yourself in the preparation of an EXAM

Document Content and Description Below

1. Question : Diane and Amanda, who are 28¬-year-¬old twins, are partners in a computer software consulting firm with 20 employees. The average age of their employees is 25 and their length of emplo... yment averages 3 years. The firm is profitable and enjoys stable cash flows. Diane and Amanda have talked about a retirement plan as an employee benefit and do not want to assume the investment risk of the plan. The partners do wish to encourage employees to make elective deferrals. Of the following retirement plan options, which is best suited for their business? Student Answer: A Section 403(b) plan An eligible Section 457 plan A profit¬-sharing plan with a Section 401(k) provision A stock bonus plan Points Received: 2 of 2 Comments: Question 2. Question : What is the covered compensation limit for determining employer contributions and plan benefits for qualified plans in 2015? Student Answer: $210,000 $18,000 $53,000 $265,000 Points Received: 2 of 2 Comments: Question 3. Question : Allison and Nick anticipate they will require an annual income of $50,000 (in current dollars) when they retire 15 years from now. They expect to receive Social Security benefits of $20,000 per year at that time. In calculating their retirement savings need, the couple is assuming a 3% annual rate of inflation, an 8% after¬-tax return on investments, and a 25¬-year retirement period. Without considering any Social Security benefit that may be available, what is the couple's total retirement fund need? Student Answer: $1,356,449 $831,544 $764,522 $1,168,178 Points Received: 0 of 2 Comments: Question 4. Question : Ryan (age 50) is employed by Best Mutual Funds (BMF) and participates in its profit-sharing Section 401(k) plan for 2015. The plan allocates contributions based on relative compensation and is not integrated with Social Security. Ryan's current annual compensation is $80,000, and he has elected to defer 5% of compensation into the Section 401(k) plan. Including Ryan, 35 employees with a total covered payroll of $1.8 million participate in the plan and have elected to defer a total of $72,000 (4% of payroll). What is the maximum deductible contribution to the profit-¬sharing plan BMF can make for 2015? Student Answer: $220,000 450,000 $378,000 $522,000 Points Received: 0 of 2 Comments: [Show More]

Last updated: 1 year ago

Preview 1 out of 20 pages