Bubbles LLC is a web design company that operates out of Boulder, Colorado. Mark and Jeff started Bubbles twenty years ago and it has grown to be one of the more sizeable web development firms in Colorado. Bubbles offers a 401(k)/profit sharing plan. The plan has the following characteristics: Eligibility: age 21 and one-year of service Match: dollar for dollar match Vesting: 20% per year (years 1 through 9) Highly compensated definition: uses top 20% election Profit-sharing contribution: Bubbles generally makes a sizeable contribution, but the percentage varies. The plan permits rollovers from other qualified plans and IRA EE#

Employee Ownership Age Tenure Salary Deferral

1 Mark 60% 48 20 Years $200,000 $10,000

2 Jeff 30% 49 20 Years $150,000 $15,000

3 Chad 6% 33 15 Years $75,000 $5,250

4 Josh 4% 42 10 Years $85,000 $5,100

5 Alex 0% 58 8 Years $60,000 $0

6 Shay 0% 29 6 Years $75,000 $4,500

7 Lisa 0% 53 4 Years $50,000 $0

8 Alison 0% 19 2 Years $60,000 $0

9 Chung 0% 25 8 Months $24,000 $0

10 Chau 0% 19 6 Months $18,000 $0

NOTE: Shay is Jeff's daughter. She graduated from the art institute five years ago.

#1. Assume the company decided to make a profit-sharing contribution that was integrated with Social Security, with an integration level equal to the Social Security wage base. If the base percentage was 10% with a maximum excess percentage, how much would be contributed to the plan on behalf of Mark (disregard the salary deferral)?

#2. Jesse has $702,000 accumulated in the 401(k) plan. The balance consists of deferrals, employer matching contributions, earnings, and profit-sharing contributions. Jesse also has an NOL carryover on his personal return from another business investment. Discuss whether Jesse can execute an in-plan Roth rollover and the tax implications.