Question

Problem 9-36 (LO. 6) Amber's employer, Lavender, Inc., has a § 401(k) plan that permits salary deferral elections by its employees. Amber's salary is $99,000, and her marginal tax rate is 24% and she is 42 years old. a. What is the maximum amount Amber can elect for salary deferral treatment for2019? $ b. If Amber elects salary deferral treatment for the above amount, how much can she save in taxes? Her tax liability for 2019 would be reduced by $. c. What is the recommended amount that Amber should elect as salary deferral treatment for 2019? $.

Answer 1

Answer:

a)The Maximum amount you can defer is restricted to individual limit of $ 18,000

b)The Tax saving due to deferral =$ 5940

c)The amount recommended for amber = $ 18000

Explanation:

a)The Maximum amount you can defer is restricted to individual limit of $ 18,000

b)The Tax saving due to deferral = 18000* .33 =$ 5940

c)The amount recommended for amber = $ 18000