Purpose

This assignment is intended to help you learn to do the following:

• Identify other tax-advantaged plans.
• Compare and contrast qualified plans with other tax-advantaged plans.
• Explain how SIMPLEs work and when they should be considered.
• Compare the similarities and differences between 403(b) plans and 401(k) plans.
• Describe how the deferral limits for SIMPLEs, SARSEPs, 401(k) plans and 403(b) plans work together.
• Differentiate between private and public eligible 457 plans as well as ineligible 457 plans.

Action Items

1. Make sure that you study Chapter 10 in the textbook before you start working on this assignment.
2. Respond to the following questions in Chapter 15 of your textbook:
   1. Item Set 5: ISOs and NQSOs Questions 1-6.
   2. Item Set 6: Qualified Plan Rules Questions 1-8.
   3. Item Set 7: 403(b) Plans Questions 1-2.

ITEM SET 6: QUALIFIED PLAN RULES Bubbles LLC is a web design company that operates out of Bouldet, Colorado. Jesse and Skyler started Bubbles twenty years ago and it has grown to be one of the more sizable web development firms in Colorado. Bubbles offers a 401(k) /profit-sharing plan with a Roth account option. 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 5) - Highly compensated definition: uses top 20% election - Profit-sharing contribution: Bubbles generally makes a sizeable contribution, but the percentage varies. - The plan has been amended to permit in plan Roth rollovers. - The plan permits rollovers from other quatified plans and IRAs. Note: Lydio is Shyler's daughter. She graduoted from the art institute five years ago. 1. Who is not eligible for the 401(k) plan? Answer: 2. Who is highly compensated? Answer: 3. What is the most that Bubbles could contribute to the profit-sharing plan for the current year assuming the salary deferrals stay constant? Answer: 4. What is the actual deferral percentage for the highly compensated employees? Answer: 5. What is the actual deferral percentage for the non-highly compensated employees? Answer: 8. How many years of service does Hector currently have for purposes of vesting? Answer: 9. Jesse has 5702000 accumulated in the 401(k) plan. The balance consists of deferrals, employer matching contributions, earnings, and peofit-sharing contributions jesse also has an NOL. carryover on his personal return from another besiness investment. Discuss whether lesse can excute an inplan Roth rollower and the tax implications. ITEM SET 6: QUALIFIED PLAN RULES Bubbles LLC is a web design company that operates out of Bouldet, Colorado. Jesse and Skyler started Bubbles twenty years ago and it has grown to be one of the more sizable web development firms in Colorado. Bubbles offers a 401(k) /profit-sharing plan with a Roth account option. 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 5) - Highly compensated definition: uses top 20% election - Profit-sharing contribution: Bubbles generally makes a sizeable contribution, but the percentage varies. - The plan has been amended to permit in plan Roth rollovers. - The plan permits rollovers from other quatified plans and IRAs. Note: Lydio is Shyler's daughter. She graduoted from the art institute five years ago. 1. Who is not eligible for the 401(k) plan? Answer: 2. Who is highly compensated? Answer: 3. What is the most that Bubbles could contribute to the profit-sharing plan for the current year assuming the salary deferrals stay constant? Answer: 4. What is the actual deferral percentage for the highly compensated employees? Answer: 5. What is the actual deferral percentage for the non-highly compensated employees? Answer: 8. How many years of service does Hector currently have for purposes of vesting? Answer: 9. Jesse has 5702000 accumulated in the 401(k) plan. The balance consists of deferrals, employer matching contributions, earnings, and peofit-sharing contributions jesse also has an NOL. carryover on his personal return from another besiness investment. Discuss whether lesse can excute an inplan Roth rollower and the tax implications