In Order to Obtain and Retain Qualified Status,a Pension or Profit-Sharing

question 80

Multiple Choice

In order to obtain and retain qualified status,a pension or profit-sharing plan must not discriminate in favor of highly compensated employees which include:

• A)Employees who own more than 5% of the corporation's stock.
• B)Employees who received over $100,000 compensation in the previous year and were in the top 20% of employees based on compensation.
• C)Employees who received over $120,000 of compensation in the previous year and were in the top 25% of employees based on compensation.
• D)None of these.

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Definitions:

After-Tax Discount Rate

The discount rate that takes into account the effect of taxes on the net income from an investment.

Straight-Line Depreciation

A tactic for parceling out the expense of a tangible asset through its effective duration in equal yearly quotas.

Initial Investments

The upfront funds required to start a project, purchase assets, or invest in a new venture.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to run day-to-day operations.