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? $.

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Business

Miya Hughes

28 November, 19:39

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? $.

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Trevor Spencer · Answer 1

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