Tax Accounting Information in Business Planning

1500-2000 words, excluding title and references

JIM is considering implementing a 401K program for its employees. The program plan will include the company matching at 50% of the employee’s contribution up to 6% contribution. The Human Resources manager proposing this plan feels it will reduce turnover, improve morale, and provide a competitive edge when recruiting new employees. The HR manager has estimated JIM’s annual contribution to be $300,000 and the savings to be $70,000 in employee turnover costs and improved performance. Management is concerned about this additional cost.

Explain the 401 K limits and special treatment for highly-compensated employees.
Document how, as a tax analyst, you see this program.
Document what, if any, will be the tax implications of this program.

Solution Preview

Tax Accounting

Introduction

Businesses that are well established run depending on the employees that they have. Investors, shareholders allcome up with the business idea and puteffort into starting a business organization, but without a workforce, then the business remains just an idea. By the necessity of the IRS,

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