Question

Required information Matthew (48 at year-end) develops cutting-edge technology for SV Inc, located in Silicon Valley In 2018, Matthew participates in SV's money purchase pension plan (a defined contribution plan) and in his company's 401(k) plan. Under money purchase pension plan, SV contributes 15 percent of an employee's salary to a retirement account for the employee up to the amount limited by the tax code. Because it provides the money purchase pension plan, SV does not contribute to the employee's 401(k) plan. Matthew would like to maximize his contribution to his 401(k) account after SV's contribution to the money purchase plan. (Leave no answer blank. Enter zero if applicable.) Assuming Matthew's annual salary is $444,000, a-1. What amount will SV contribute to Matthew's money purchase plan? a-2. What can Matthew contribute to his 401(k) account in 2018? Required information r-end) develops cutting-edge technology for SV Inc, located in Silicon Valley. In 2018, Matthew in SV's money purchase pension plan (a defined contribution plan) and in his company's 401(k) plan. Under Matthew (48 at year pension plan, SV contributes 15 percent of an employee's salary to a retirement account for the employee up to the amount limited by the tax code. Because it provides the money purchase pension plan, SV does not contribute to the employee's 401(k) plan. Matthew wo SV's contribution to the money purchase plan. (Leave no answer blank. Enter zero if applicable.) uld like to maximize his contribution to his 401(k) account after Assuming Matthew's annual salary is $306,0o0 b-1. What amount will SV contribute to Matthew's money purchase plan? b-2. What can Matthew contribute to his 401(k) account in 2018? Required information Matthew (48 at year-end) develops cutting-edge technology for SV Inc., located in Silicon Valley. In 2018, Matthew participates in SV's money purchase pension plan (a defined contribution plan) and in his company's 401(k) plan. Under the money purchase pension plan, SV contributes 15 percent of an employee's salary to a retirement account for the employee up to the amount limited by the tax code. Because it provides the money purchase pension plan, SV does not contribute to the employee's 401(k) plan. Matthew would like to maximize his contribution to his 401(k) account after SV's contribution to the money purchase plan. (Leave no answer blank. Enter zero if applicable.) Assuming Matthew's annual salary is $71,000, c-1. What amount will SV contribute to Matthew's money purchase plan? c-2. What can Matthew contribute to his 401(k) account in 2018? Required information Matthew (48 at year-end) develops cutting-edge technology for SV Inc., located in Silicon Valley. In 2018, Matthew participates in SV's money purchase pension plan (a defined contribution plan) and in his company's 401(k) plan. Under the money purchase pension plan, SV contributes 15 percent of an employee's salary to a retirement account for the up to the amount limited by the tax code. Because it provides the money purchase pension plan, SV does not contribute to the employee's 401k) plan. Matthew would like to maximize his contribution to his 401(k) account after contribution to the money purchase plan. (Leave no answer blank. Enter zero if applicable.) d. Assume the same facts as part c, except that Matthew is 54 years old at the end of 2018. What amount can Matthew contribute to his 401(k) account in 2018? Matthew's contribution to 401(k) account

Answer 1

Solution

1.Matthew's annual salary is $4,44,000

a. SV can contribute up to 25% of employee's salary (or)$55,000 which ever is less. SV contributes $55,000 in the year since it is the least.

b.The maximum amount that Matthew can contribute to his 401(k) plan in the year 2018 is $18,500 so he will contribute $18,500 since he has the motive to maximize his contribution to his 401(k) account.

2. Matthew's annual salary is $3,06,000

a. SV can contribute up to 25% of employee's salary (or)$55,000 which ever is less. SV contributes $55,000 in the year since it is the least.

b. The maximum amount that Matthew can contribute to his 401(k) plan in the year 2018 is $18,500 so he will contribute $18,500 since he has the motive to maximize his contribution to his 401(k) account.

3.Matthew's annual salary is $71,000

a. SV can contribute up to 25% of employee's salary (or) $55,000 which ever is less.

(0.25 * 71,000 ) is $17,750 which is less than $55,000, SV will contribute only $17,750 towards Matthew's money purchase plan.

b.The maximum amount that Matthew can contribute to his 401(k) plan in the year 2018 is $18,500.So, he will contribute $18,500 since he has the motive to maximize his contribution to his 401(k) account.

c.Matthew will be to contribute the same maximum amount of $18,500 to his 401 (k) account at the end of 2018 because this maximum limit that can be contributed to 401(k) account is independent on one's age.The limit is modified every year based on the based on inflation.

So,he will contribute the same $18,500 since he is with the motive to maximize his contribution to his 401(k) account.