Which of the following statements regarding contributions to defined contribution plans is true?
A)Employer contributions to a defined contribution plan are not limited by the tax law.
B)Employee contributions to a defined contribution plan are not limited by the tax law.
C)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.
D)The tax laws limit the sum of the employer and employee contributions to a defined contribution plan.The sum of employer and employee contributions is limited by the tax law.The limit is indexed for inflation.

Question

Quizplus · Accepted Answer

The tax laws limit the sum of the employer and employee contributions to a defined contribution plan. The limit is indexed for inflation. Option A and B are incorrect as both employer and employee contributions are limited by tax laws. Option C is incorrect as age does not affect contribution limits, but may affect catch-up contributions for individuals over age 50.

Which of the Following Statements Regarding Contributions to Defined Contribution