Question

MH: sponsors a qualified profit sharing plan. Of their 205 employees, 200 are nonexcludable. Of the 200 nonexcludable employees, 160 are NHC and 40 are HC. The plan covers 110 of the NHC and 15 of the HC. The plan does not meet the coverage requirements because only 69% of the NHC are covered by the plan.

(a) True

(b) False

Answer 1

Answer:

b) False

Explanation:

The answer to the question above is "false".

MH’s plan meets the coverage requirements because the plan passes the ratio percentage test.

The percentage of NHC covered, 68.75% (110/160), divided by the percentage of HC covered, 37.5% (15/40), is greater than 70%.