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JUNE 97 EXAM, Q62


Jean
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Can someone please explain the answer?

Based on the following information, what is the participant's annual top-heavy minimum accrued

benefit as of June 30, 1997?

The participant works over 1000 hours per year and only participates in this plan.

The plan has always been super top-heavy.

The top-heavy min benefit is based upon years of service.

The plan year is July 1 to June 30.

DOH = 7/1/90

Plan Effective = 7/1/86

Annual comp:

6/30/91 = $20K

6/30/92 = 25K

6/30/93 = 25K

6/30/94 = 15K

6/30/95 = 22K

6/30/96 = 23K

6/30/97 = 10K

ANSWER = $3080???

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Looks to me like the question is testing your knowledge of IRC 416©(1)(D).

High 5 year average comp is 22,000 (92 thru 96). Seven years of top heavy service.

22000 x .02 x 7 = 3080.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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