In: Accounting
Assume the employee does withdraw all of the funds whether you say it is a good idea or not: $30,000 contributed by her and $15,000 contributed by the employer. The plan has a 3-7 vesting schedule. Ignoring only ordinary income tax, how much will the employee receive at distribution in each of the following circumstances?
i. The employee is 35 years old, has worked for you for 6 years and is leaving to take another job. She plans on rolling over her distribution to her new employer’s qualified plan immediately.
ii. The employee is 50 years old and in the midst of a mid-life crisis after working for you for 15 years. She quits and plans on taking her distribution to a tropical island where she will live until the money runs out.
iii. The employee has worked for you for the last 10 years but is 63 years old and decides to retire early.
iv. The employee has worked for you forever and never plans to retire. She is 72 years old and has a life expectancy of 15 years (according to the IRS).