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22 June, 08:14

Paul, age 37, participates in a Section 401 (k) plan which allows employees to contribute up to 15 percent of their salary. His annual salary is $125,000 in 2019. What is the maximum he can contribute, on a tax-deferred basis under a salary reduction agreement, to this plan?

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  1. 22 June, 12:11
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    Paul can contribute up to $19,000 per year but his contribution based on his salary is $18,750

    Explanation:

    contribution = $125*0.15 = $18750.
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