Which of the following statements regarding contributions to defined contribution plans is true?
A) An employee who is at least 60 years of age as of the end of the year may contribute more to a defined contribution plan than an employee who has not reached age 60 by year-end.
B) Employee contributions to a defined contribution plan are not limited by the tax law.
C) Employer contributions to a defined contribution plan are not limited by the tax law.
D) The tax laws limit the sum of the employer and employee contributions to a defined contribution plan.

Question

Quizplus · Accepted Answer

The tax laws limit the sum of the employer and employee contributions to a defined contribution plan. Specifically, in 2021, the total contribution limit is $58,000 or 100% of the employee's compensation, whichever is less. Note that the limit is subject to annual adjustment for cost-of-living increases. Option A is incorrect because age does not affect contribution limits. Option B and C are incorrect because both employee and employer contributions are subject to tax law limitations.

Which of the Following Statements Regarding Contributions to Defined Contribution