Polly, age 45, participates in her employer's Section 401(k) plan which allows employees to contribute up to 15 percent of their salary. Her annual salary is $100,000 in 2016. What is the maximum she can contribute to this plan on a tax-deferred basis under a salary reduction agreement?

Question

Quizplus · Accepted Answer

In 2016, the maximum contribution limit for a 401(k) plan was $18,000. However, Polly's employer allows contributions up to 15% of her salary, which is $15,000 ($100,000 * 15%). Since $15,000 is less than the $18,000 limit, $15,000 is the maximum she can contribute.

Polly, Age 45, Participates in Her Employer's Section 401(k) Plan