In Order to Obtain and Retain Qualified Status, a Pension

question 7

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.
• C) Employees who were in the top 25% of employees based on compensation.
• D)None of these.

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Definitions:

Future Value

The value of an asset at a specific date in the future, projecting its growth due to interest or earnings.

Deposit

A sum of money placed into a bank account or given as part of a contractual agreement as a security for future performance.

Compounded Monthly

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, with the compounding done monthly.

Future Value

The value of a current asset at a specified date in the future based on an assumed rate of growth.