Which of the following statements concerning the nondiscrimination requirements of profit-sharing and stock bonus 401(k) plans...

Which of the following statements concerning the nondiscrimination requirements of profit-sharing and stock bonus 401(k) plans is correct? (A) The actual deferral percentage of the highly-paid employees may not exceed 100% of that of the nonhighly-paid. (B) The actual deferral percentage of the highly-paid employees may not be more than 200% of that of the nonhighly-paid, and the difference between the two percentages may not exceed 2%. (C) The use of a safe-harbor provision is prohibited. (D) In addition to the ADP test, the plans must satisfy both the ratio percentage test and the average benefit test.

Expert Solution

Which of the following statements concerning the nondiscrimination requirements of profit-sharing and stock bonus 401(k) plans is correct?

Answer is (B)

(B) The actual deferral percentage of the highly-paid employees may not be more than 200% of that of the nonhighly-paid, and the difference between the two percentages may not exceed 2%.

ekkarill92 answered 2 years ago

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