Question

Maxim Co. has 5 employees, all of whom are in the plan. They contribute 10% of compensation to their defined contribution plan each year. The employees have the following information:

- Nancy earns $500,000.
- Olive earns $80,000.
- Pat earns $60,000.
- Quincy earns $50,000.
- Rachel earns $40,000.
How much may Maxim Co. contribute to Nancy's account?

a.) $28,500
b.) $0
c.) $50,000
d.) $57,000
e.) $19,500

Answer 1

Maxim Co. may contribute $50,000 to Nancy's account.

Step-by-step explanation:

To calculate how much Maxim Co. may contribute to Nancy's account, we need to multiply her compensation ($500,000) by the contribution rate (10%).

Using the formula:

Contribution = Compensation x Contribution Rate

We find: Contribution = $500,000 x 10% = $50,000.

Therefore, Maxim Co. may contribute $50,000 to Nancy's account.