Question

Jack and Jill own a successful engineering company, which sponsors a 401(k) plan that requires standard eligibility. Sam, Tom and Pat are the only other employees, who are between the ages of 25 and 29 and have been with the company for a couple of years. Jack and Jill each have salaries of $200,000, while their employees have salaries ranging between $28,000 and $30,000. Jack and Jill both defer $10,000 each. Sam, who is Jack and Jill's son, earns $30,000 and defers $6,000 into the 401(k) plan. Tom, who makes $28,000, defers $2,800, while Pat does not defer anything into the 401(k) plan. Which of the following statements is correct? a. The ADP for the NHC employees is 6.67% b. If the plan failed the ADP test, then the issue could be solved by providing a qualified matching contribution to all five employees. c. Jack and jill are the only highly compensated employees. d. If the company hired a new employee, it would not increase the amount that Jack and Jill can defer during the first year of the employee's employment?

Answer 1

Answer: Jack and Jill are the only highly compensated employees.

If the company hired a new employee, it would not increase the amount that Jack and Jill can defer during the first year of the employee’s employment

Step-by-step explanation:

From the data presented above it is very obvious that jack and jull are the only employees who are highely compnested with each earning almost 8 times what other employees earning.

even if the company employed new employees, this would still not affect the amount Jack and Jill would be able to differ.