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  #1  
Old 10-21-2008, 08:50 PM
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Default 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:



instead of the solution


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.
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  #2  
Old 10-21-2008, 10:08 PM
Actiger Actiger is offline
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Quote:
Originally Posted by colby2152 View Post
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:



instead of the solution


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.
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  #3  
Old 10-22-2008, 08:07 AM
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Quote:
Originally Posted by Actiger View Post
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.
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Old 10-22-2008, 10:18 AM
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Originally Posted by kjlimo View Post
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.
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Old 10-22-2008, 12:07 PM
davefarber davefarber is offline
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Quote:
Originally Posted by colby2152 View Post
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.
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Old 10-22-2008, 03:26 PM
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Originally Posted by davefarber View Post
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?
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Old 10-22-2008, 04:52 PM
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Originally Posted by colby2152 View Post
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.
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Old 10-23-2008, 10:04 AM
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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!
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Old 10-23-2008, 11:25 AM
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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!
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Old 10-23-2008, 12:23 PM
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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!
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