Question: Problem 2 The following table contains qualified plan information for Yarbrough, Inc., as of 12/31/2015. Yarbrough, Inc., maintains a noncontributory qualified profit-sharing plan with 3-year
Problem 2
The following table contains qualified plan information for Yarbrough, Inc., as of 12/31/2015. Yarbrough, Inc., maintains a noncontributory qualified profit-sharing plan with 3-year cliff vesting.
| Employee | Compensation | Ownership Interest | Years of Service* | Plan Account Balance* |
| A | $270,000 | 5% | 2 | $20,000 |
| B | $180,000 | 8% | 10 | $300,000 |
| C | $130,000 | 6% | 8 | $180,000 |
| D | $60,000 | 1% | 3 | $27,000 |
| E | $40,000 | 0% | 2 | $7,500 |
| * As of 12/31/15 | ||||
Please answer all of the following questions:
a. What is the total covered compensation for 2015?
b. What is the maximum profit-sharing contribution Yarbrough can make for 2015?
c. Which of the employees is highly compensated?
d. Is the plan top-heavy?
e. If employees D and E quit in January 2016, what are their respective vested balances in the plan?
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