Question

Which of the following statements about stock bonus plans is false?

a. A CODA can be attached to a stock bonus plan.

b. Participants of a stock bonus plan must have the right to demand employer securities on plan distributions.

c. Stock bonus plans have a deductible contribution limit of 25 percent of compensation.

d. None of the above are false. All are true.

Answer 1

Option-(d): None of the above are false. All are true. Option-(a): A CODA can be attached to a stock bonus plan" is correct because CODA stands for Cash Or Deferred Arrangement' and 401(k) plans consist of a CODA attached to a profit sharing plan or stock bonus plan. According to which, employers may also make a contribution to the profit sharing or stock bonus plan. ts of a stock bonus plan must have the right to demand employer securities on plan distributions" is correct because under stock bonus plans, participants must have the right to demand employer securities upon distributions Option-(c): "Stock bonus plans have a deductible contribution limit of 25 percent of compensation" is correct because if a profit-sharing plan like stock bonus plan is used, the organization's deduction for contributions to the plan is limited to 25 percent of aggregate participant compensation.