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ESOP annual addition limit


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I am working on the ASPPA CPC ESOP Module this quarter and am not getting any of the answers associated with the question regarding annual addition limit. Is there anyone who can help?

The particulars are: C Corporation, HCE receive less than 1/3 of the ESOP contribution, looking for the 2010 annual addtion limit for Employee A based uon the following information:

Employee A earns in excess of $500,000

Elective Deferrals = $16,500

Matching contribution is 100% of first 4% of compensation

ESOP leveraged stock forfeiture = $3,450

ESOP contribution is $24,500 (including $8,875 in interest)

My understanding is since company is a C-Corp and HCEs are receiving less than 1/3 of the ESOP contribution, that the annual addition limit would be

Elective Deferrals + Match + ESOP Contribution (less interest) AND you ignore the forfeiture amount. So if my math is correct I think the annual addition limit is $16,500 + $9,800 (100% of 4% of $245,000) + 15,625 (ESOP excluding interest) = $41,925. This answer is none of the five provided.

Am I calculating correctly? If not, what am I missing? Thanks.

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Kathy:

I had exactly the same questionabout question 12 and I still don't get if even after the response from QDROphile. I sent an email to ASPPA, yesterday asking them to confirm that one of the answers on the test was actually correct. I am still waiting to hear from them.

Kate Smith

Kate Smith

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Kathy:

I had exactly the same questionabout question 12 and I still don't get if even after the response from QDROphile. I sent an email to ASPPA, yesterday asking them to confirm that one of the answers on the test was actually correct. I am still waiting to hear from them.

Kate Smith

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The amount you calculate is the amount subject to the limit, not the limit. Maybe it is in the way the question is asked. Another way to look at the limit is the stated 415 limit amount plus the disregarded interest and forfeitures.

The question specifically asks for Employee A's annual addition amount.

However, even if I add back the disregarded interest and forfeitures, this number is not one of the answers.

Any thoughts.

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Kathy:

I had exactly the same questionabout question 12 and I still don't get if even after the response from QDROphile. I sent an email to ASPPA, yesterday asking them to confirm that one of the answers on the test was actually correct. I am still waiting to hear from them.

Kate Smith

Kate,

I wrote to ASPPA on April 6 on this issue and completed the required form on the website. The website information indicated that if I did not get a response from ASPPA within 10 business days, that meant there was no change to the information. So I am really confused.

Kate, what answer did you get for the problem? Is my thinking correct or did I miss something in my analysis. I do understand what QDROphile was saying, but the question specifically asks for the particiular employee's annual addition AND not the annual addition limit for 2010.

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Kathy:

I had exactly the same questionabout question 12 and I still don't get if even after the response from QDROphile. I sent an email to ASPPA, yesterday asking them to confirm that one of the answers on the test was actually correct. I am still waiting to hear from them.

Kate Smith

Kate,

I wrote to ASPPA on April 6 on this issue and completed the required form on the website. The website information indicated that if I did not get a response from ASPPA within 10 business days, that meant there was no change to the information. So I am really confused.

Kate, what answer did you get for the problem? Is my thinking correct or did I miss something in my analysis. I do understand what QDROphile was saying, but the question specifically asks for the particiular employee's annual addition AND not the annual addition limit for 2010.

Kathy:

Based on the example in the study guide I had the same analysis as you. And, even using QDROphile's advice, I cannot come up with any of the answers they list on the exam.

Thank you for letting me know that you had already contacted ASPPA. I guess I will submit my exam by guessing at this one. I think I have enough right answers to pass. I sure hope so because did you notice that we can only take this exam once? All the others you could take twice (thankfully I did not have to). This is my last exam before CPC and I just want to be done!

Kate

Kate Smith

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BTW, I did not look at the question and my intended message was "the amount you calculated" and not the prescriptive "the amount you calculate." I was commenting on your correct interpretation of the special ESOP rules and why it might not produce a "correct" answer. Evidently it is still a mystery.

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Kate,

I finally took the test. I got a passing score, but no confirmation from ASPPA yet. Now I am waiting to hear from ASPPA with regards to my questions. I did re-read the form that ASPPA asked you to fill out with regards to issues you found and the form indicated that ASPPA would not respond until you completed the exam.

Hope your exam went well.

Kathy

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Kathy:

Congratulations! I also took and passed the exam and even got that answer right, though I just guessed at it. Isn't it good to have that behind you?

I also have not had confirmation from ASPPA that I passed the exam but I went ahead and applied for my CPC credential.

I will look forward to hearing from ASPPA as to the way they came up with the answer.

Kate

Kate Smith

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Kathy:

Congratulations! I also took and passed the exam and even got that answer right, though I just guessed at it. Isn't it good to have that behind you?

I also have not had confirmation from ASPPA that I passed the exam but I went ahead and applied for my CPC credential.

I will look forward to hearing from ASPPA as to the way they came up with the answer.

Kate

I finally got a note back from ASPPA and the correct answer was not on the test. Here is their reponse: " Thank you for submitting your candidate inquiry form re the CPC ESOP Module. You are correct, the right answer was not listed as an answer choice. We've since updated the examination for future candidates and sincerely appreciate that you brought it to our attention. Again, thank you for pointing out this error and helping us to improve the quality of our materials."

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  • 3 weeks later...
Guest KateSmithVA

Well, I am glad you got an answer from them. We knew the right answer wasn't there!

I'm just glad the whle ordeal is over.

Kate

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