Question

In 2019, for taxpayers under age 50 at year-end, the sum of the employee and employer contributions to an employee's defined contribution account(s) is limited to the lesser of (1) $(1) or (2) (2) percent of the employee's compensation for the year. Furthermore, the employee contributions are limited to $(3).

a) 25, 20
b) 19, 25
c) 56, 15
d) 40, 10

Answer 1

In 2019, for taxpayers under 50, the total limit for defined contribution plans such as 401(k)s was $56,000 or 100% of compensation, with a $19,000 limit on employee contributions alone.

Step-by-step explanation:

The question pertains to the limitations on contributions to defined contribution plans, such as 401(k)s and 403(b)s, for taxpayers under age 50 in the year 2019. These plans allow both employee and employer to contribute, with the total contribution being limited to the lesser of 100% of the employee's compensation or a set dollar amount. Additionally, the amount an employee can contribute is subject to a maximum limit.

For 2019, for taxpayers under age 50, the sum of the employee and employer contributions to an employee's defined contribution account(s) is limited to the lesser of (1) $56,000 or (2) 100 percent of the employee's compensation for the year. Furthermore, the employee contributions alone were limited to $19,000. Therefore, the correct answer to the question is (c) 56, 100.