Question

George Clausen (age 48) is employed by Kline Company and is paid an annual salary of $42,640. He has just decided to join the company's Simple Retirement Account (IRA form) and has a few questions. Answer the following for Clausen: Round your answer to the nearest cent.

a. What is the maximum that he can contribute into this retirement fund?

$

b. What would be the company's contribution?

$

Note: For items c. & d. below, round interim amounts to two decimal places. Use these values in subsequent computations then round final answer to two decimal places.

c.  What would be his weekly take-home if he contributes the maximum allowed retirement contribution (married, 2 allowances, wage-bracket method, and a 2.3% state income tax on total wages)?

Click here to access the Wage-Bracket Method Tables.

$

d. What would be his weekly take-home pay without the retirement contribution deduction?

$

Answer 1

Req. A
The maximum that he can contribute into this retirement fund	$ 12,500.00
Req. B
The company's contribution (42640*3%)	$   1,279.20
Req. C
Weekly Pay (42640/52)	$      820.00
Less: Weekly Retirement Contribution (12500/52)	$      240.38
Weekly Wages	$      579.62
Less:
FICA Tax (820*(6.2%+1.45%))	$         62.73
Federal Income Tax (Refer to Weekly Wage Table 2019 for Married Persons, Column for 2 Allowances)	$         20.00
State Income Tax	$         18.86
Weekly Take Home Pay	$      478.03
Req. D
Weekly Pay (42640/52)	$      820.00
Less:
FICA Tax (820*(6.2%+1.45%))	$         62.73
Federal Income Tax (Refer to Weekly Wage Table 2019 for Married Persons, Column for 2 Allowances)	$         44.00
State Income Tax	$         18.86
Weekly Take Home Pay	$      694.41