4. Mikael opened a fabulous restaurant ten years ago. The food is so exceptional

Question

4. Mikael opened a fabulous restaurant ten years ago. The food is so exceptional that the restaurant has become one of the top spots in the city. Mikael, age 55, is the sole owner with compensation of $265,000. Mikael's son Jamel, age 28, is the master chef with compensation of $100,000. Jamel has been with the restaurant full time since he turned 18. Mikael also employs 15 other individuals whose ages range between 25 and 35 and have compensation on average of $40,000 per year. Mikael wants to establish a profit sharing plan. Which of the following statements is true a. If Mikael selected the standard allocation method and the plan contributes 10 percent per individual, the plan will contribute $53,000 to Mikael's account. b. If Mikael selected the permitted disparity method and the plan contributes 10 percent per individual, the contribution the company makes for Mikael will be increased profit sharing plan is the best plan for both of them. both Mikael and Jamel's retirement needs. c. Considering the needs and wants of Mikael and Jamel, an age-based d. A new comparability plan is the least expensive, simplest way to meet

Explanation / Answer

c. Considering the needs and wants of Mikael and Jamel, an age based profit sharing plan is the best plan for both of them

In this context, there is a clear difference between Mikael and Jamel because of their age and hence it woudl be appropriate to focus on age in this context which will be fair for both of them.

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