A retirement plan covers 72% of the non-highly compensated individuals.The plan benefits 48 of the 131 employees.Which is true?

Question

Quizplus · Accepted Answer

To meet the minimum coverage requirement under the nondiscrimination rules of the Internal Revenue Code, a retirement plan must cover at least 70% of all non-highly compensated employees, or satisfy the minimum participation test. The plan in this scenario covers 72% of non-highly compensated employees, thus meeting the 70% coverage requirement. However, the plan only benefits 48 out of the 131 non-highly compensated employees, which may signify a failure to meet the minimum participation test. Therefore, option C is correct.

A Retirement Plan Covers 72% of the Non-Highly Compensated Individuals