Question

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?

Answer 1

Paul can contribute up to $19,000 per year but his contribution based on his salary is $18,750

Step-by-step explanation:

contribution = $125*0.15= $18750.