Exam 19: Deferred Compensation

Brown,Inc. ,uses the three-to-seven year graded vesting approach for its defined benefit retirement plan.Peter has five years of service completed as of February 5,2014,his employment anniversary date.Determine Peter's nonforfeitable percentage.

The "spread" on an incentive stock option is subject to the alternative minimum tax.

Which of the following characteristics is not a characteristic of a stock bonus plan?

In order to postpone income tax obligations as long as possible,retirement assets should be taken from which assets (or accounts)first?

The payout to an employee in a cash balance plan is based upon a formula based on years of service.

Group life insurance is considered a deferred compensation plan.

Which statement is true with respect to golden parachute payments?

A participant,who is age 38,in a cash or deferred arrangement plan [§ 401(k)] may contribute up to what amount in 2014?

Forfeitures may be allocated to the accounts of the remaining participants in defined contribution plans.

Saysha is an officer of a local bank that merges with a national bank,resulting in a change of ownership.She loses her job as a result of the merger,but she receives a cash settlement of $390,000 from her employer under her golden parachute.Her average annual compensation for the past five tax years is $110,000.Calculate any nondeductible excise tax Saysha must pay,if any.

A company is denied a deduction for a golden parachute payment to an employee,but not for a golden parachute payment to an independent contractor.

In 2014,Jindal Corporation paid compensation of $42,300 to the participants in a profit sharing plan and then contributed $12,800 to the plan.Jindal's deductible amount and any contribution carryover are as follows:

Jana has $225,000 of earned income in 2014.Calculate the amount she can contribute to a SEP.

The special § 83(b)election (i.e. ,where income is taxed in the year of the grant)with respect to a restricted stock plan may be advantageous in which of the following situations in 2014?

What is a profit sharing plan?

If an employer's contribution to a SEP IRA is less than $52,000 in 2014 (or 25% of the employee's earned income,if less),the employee can contribute the difference.

A defined benefit retirement plan covers 72% of the non-highly compensated individuals.The plan benefits 48 of the 131 employees.Which is true?

Dana contributes $2,000 too much to a § 401(k)plan which is not returned within 2 1/2 months after the close of the tax year.The employer will have to pay a tax of $200.

Sammy,age 31,is unmarried and is not an active participant in a qualified retirement plan.His modified AGI is $55,000 in 2014.The maximum amount that Sammy can deduct for a contribution to a traditional IRA is:

Fred is a self-employed accountant with gross earned income of $140,000 per year (after the deduction for one-half of any self-employment tax).He has a profit sharing plan (i.e. ,defined contribution plan).What is the maximum amount Fred can contribute to his retirement plan?