The Holden Corporation maintains a SIMPLE-IRA retirement plan for its employees.The company has notified its employees that for 2013 it will fund the SIMPLE-IRA by matching an employee's contribution up to a maximum of 3% of the employee's salary.Harrison's salary in 2013 is $50,000 and he contributed $2,000 to the plan.What amount must Holden contribute on Harrison's behalf?

Question

Quizplus · Accepted Answer

Since Holden will match Harrison's contribution up to a maximum of 3% of his salary, the maximum amount Holden will contribute on Harrison's behalf is 3% of $50,000, which is $1,500. Therefore, Holden will contribute $1,500 - $2,000 = $-500 on Harrison's behalf. However, Holden cannot contribute a negative amount, so the correct answer is $0.

The Holden Corporation Maintains a SIMPLE-IRA Retirement Plan for Its