For employees under age 50, what is the maximum contribution to a 401k plan?

The maximum contribution limit for employees under age 50 to a 401(k) plan is $20,500 for the year 2022, which reflects an increase from previous years. It's important to note that this limit is adjusted periodically for inflation and may change in subsequent years. The $20,500 contribution limit applies specifically to elective deferrals made by the employee, which can include wages sacrificed to contribute to their retirement plan.

Understanding these limits is crucial for effective retirement planning and for ensuring that employees are taking full advantage of tax-deferred savings opportunities. If workers exceed these contribution limits, they might face penalties or additional taxes, so awareness of the correct figures is vital for compliance and optimal financial management.

To clarify the other choice options, they either pertain to earlier years’ limits or are currently outdated figures. Therefore, B, which indicates the amount of $20,500, is the most accurate and up-to-date contribution limit for employees under age 50. Be aware that these limits can vary annually, so it's essential to verify each year’s contribution caps.