Samantha Montgomery (age 42) is employed by Canon Company and is paid a salary of $62,430....

Samantha Montgomery (age 42) is employed by Canon Company and is paid a salary of $62,430. She has just decided to join the company's Simple Retirement Account (IRA form) and has a few questions. Answer the following for Montgomery:

3.a. What is the maximum that she can contribute into this retirement fund? $____________

3.b. What would be the company's contribution? $_____________

3.c. What would be her weekly take-home pay with the retirement contribution deducted (married, 2 allowances, wage-bracket method, and a 2.3% state income tax on total wages)? Use the Wage- bracket tables in Publication 15. $______________

3.d. What would be her weekly take-home pay without the retirement contribution deduction? $____________

Solutions

Expert Solution

3a.

The maximum amount than an employee can contribute in SIMPLE IRA shall not exceed $12500. Hence, Samantha Montgomery cam contribute up-to $12500 from her salary to the Simple IRA.

3b.

Generally an employer require to contribute an equal amount as contributed by the employee thus, the company needs to contribute an equal amount as contributed by Samantha Montgomery.

3c.

Annual salary (gross)	62430
Weekly salary
Annual salary (gross)	62430
Number of weeks in a year	52

Weekly salary	1200.577
Less: Weekly contribution in IRA	240.3846
	960.1923
Less: State income tax @2.3% on total wages	27.61327
Weekly take home pay	932.579

3d.

Annual salary (gross)	62430
Weekly salary
Annual salary (gross)	62430
Number of weeks in a year	52

Weekly salary	1200.577
Less: Weekly contribution in IRA	0
	1200.577
Less: State income tax @2.3% on total wages	27.61327
Weekly take home pay	1172.964

ekkarill92 answered 9 months ago

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