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#1
10-21-2008, 08:50 PM
 volva yet Note Contributor Join Date: Feb 2006 Location: Nomadic Studying for GHC/DMAC College: PSU '07 Favorite beer: Oskar Blues Old Chub Scotch Ale Posts: 4,948
Farber #92

I believe the solution is incorrect, notably the 415 percent of pay limit for 2007 and 2008.

Quote:
 QUESTION 92 Plan effective date: 1/1/2003 Benefit formula: \$175 per month per year of plan participation Data for sole participant: Date of Birth: 1/1/1948 Date of Hire: 1/1/1998 Annual compensation each year: \$9,000
For 2007, shouldn't the 415(b) percent of pay limit, per month, be equal to:

$9,000*0.9/12 = 675$

$833.33*0.9 = 750$

That \$833.33 is then used again for 2008, but not reduced per service (as it should not be). My qualms with this problem is that instead of 833.33 as monthly pay, it should be 750.
#2
10-21-2008, 10:08 PM
 Actiger Member SOA CCA AAA Join Date: May 2007 Location: NYC Studying for Married Life Posts: 1,373

Quote:
 Originally Posted by colby2152 I believe the solution is incorrect, notably the 415 percent of pay limit for 2007 and 2008. For 2007, shouldn't the 415(b) percent of pay limit, per month, be equal to: $9,000*0.9/12 = 675$ instead of the solution $833.33*0.9 = 750$ That \$833.33 is then used again for 2008, but not reduced per service (as it should not be). My qualms with this problem is that instead of 833.33 as monthly pay, it should be 750.
9,000 comp limit < 10,000 floor limit, therefore 10,000 is the 415 limit.
#3
10-22-2008, 08:07 AM
 kjlimo Member SOA AAA Join Date: May 2006 Location: Cleveland Favorite beer: PumKing Posts: 623

Quote:
 Originally Posted by Actiger 9,000 comp limit < 10,000 floor limit, therefore 10,000 is the 415 limit.
Make sure you phase in the floor limit as well.

This is how we get 10,000 * .9 / 12 = 750 per month.
#4
10-22-2008, 10:18 AM
 volva yet Note Contributor Join Date: Feb 2006 Location: Nomadic Studying for GHC/DMAC College: PSU '07 Favorite beer: Oskar Blues Old Chub Scotch Ale Posts: 4,948

Quote:
 Originally Posted by kjlimo Make sure you phase in the floor limit as well. This is how we get 10,000 * .9 / 12 = 750 per month.
My point exactly... I had 750 per month, but the solution states a larger number of 833.
#5
10-22-2008, 12:07 PM
 davefarber Member Join Date: Nov 2001 Posts: 1,123

Quote:
 Originally Posted by colby2152 My point exactly... I had 750 per month, but the solution states a larger number of 833.
If you look at the solution, you will see that the 750 is used as of 1/1/2007, and 833 on 12/31/2007, when the participant has 10 years of service. The solution is correct.
#6
10-22-2008, 03:26 PM
 volva yet Note Contributor Join Date: Feb 2006 Location: Nomadic Studying for GHC/DMAC College: PSU '07 Favorite beer: Oskar Blues Old Chub Scotch Ale Posts: 4,948

Quote:
 Originally Posted by davefarber If you look at the solution, you will see that the 750 is used as of 1/1/2007, and 833 on 12/31/2007, when the participant has 10 years of service. The solution is correct.
Hmm, the solution has 750 and 833 for the beginning and end of 2007, respectively. How is that so?
#7
10-22-2008, 04:52 PM
 davefarber Member Join Date: Nov 2001 Posts: 1,123

Quote:
 Originally Posted by colby2152 Hmm, the solution has 750 and 833 for the beginning and end of 2007, respectively. How is that so?
9 years of service at the beginning of the year, and 10 years of service at the end of the year.
#8
10-23-2008, 10:04 AM
 volva yet Note Contributor Join Date: Feb 2006 Location: Nomadic Studying for GHC/DMAC College: PSU '07 Favorite beer: Oskar Blues Old Chub Scotch Ale Posts: 4,948

Quote:
 Originally Posted by davefarber 9 years of service at the beginning of the year, and 10 years of service at the end of the year.
Whoa... kept on missing the de minimis ten grand floor... sorry about the badgering Dave!
#9
10-23-2008, 11:25 AM
 davefarber Member Join Date: Nov 2001 Posts: 1,123

Quote:
 Originally Posted by colby2152 Whoa... kept on missing the de minimis ten grand floor... sorry about the badgering Dave!
That's OK -- there seems to be a rumor going around that the Internal Revenue Code and regulations are confusing -- imagine that!
#10
10-23-2008, 12:23 PM
 volva yet Note Contributor Join Date: Feb 2006 Location: Nomadic Studying for GHC/DMAC College: PSU '07 Favorite beer: Oskar Blues Old Chub Scotch Ale Posts: 4,948

Quote:
 Originally Posted by davefarber That's OK -- there seems to be a rumor going around that the Internal Revenue Code and regulations are confusing -- imagine that!
HAHA, yes.. imagine that!

 Tags 415, 415 limit, ea-2a