Posie is an employee of Geiger Technology and earns $90,000 in 2012.The maximum amount Geiger can contribute to a profit sharing plan on behalf of Posie is
A)$ 6,000
B)$13,500
C)$22,500
D)$25,000
E)$49,000

Question

Quizplus · Accepted Answer

The maximum amount that an employer can contribute to a profit-sharing plan on behalf of an employee is 25% of the employee's compensation, or $50,000, whichever is less. In this case, Posie's compensation is $90,000, so the maximum amount that Geiger can contribute to a profit-sharing plan on her behalf is 25% of $90,000, which is $22,500.

Posie Is an Employee of Geiger Technology and Earns $90,000